In a flexible budget, what will happen to fixed costs as the activity level increases?
A) The fixed cost per unit will decrease.
B) The fixed cost per unit will remain unchanged.
C) The fixed cost per unit will increase.
D) Fixed costs are not included in a flexible budget.

Question

Quizplus · Accepted Answer

Fixed costs per unit decrease as the activity level increases because the total fixed costs are spread over more units, reducing the cost allocated to each unit.

In a Flexible Budget, What Will Happen to Fixed Costs