If the activity level decreases, what happens to the unit fixed cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.

Question

Quizplus · Accepted Answer

When the activity level decreases, the unit fixed cost increases because the fixed costs are spread over a smaller number of units, leading to a higher cost per unit.

If the Activity Level Decreases, What Happens to the Unit