LL Company produces and sells a product that has variable costs of $9 per unit and fixed costs of $200,000 per year.If production decreases from 50,000 to 40,000 units,the cost per unit will ________.
A)increase by $1
B)increase by $13
C)decrease by $1
D)decrease by $14

Question

Quizplus · Accepted Answer

When production decreases, the fixed costs are spread over fewer units, increasing the cost per unit. The fixed cost per unit increases from $4 ($200,000/50,000) to $5 ($200,000/40,000), resulting in a $1 increase per unit.

LL Company Produces and Sells a Product That Has Variable