When the level of activity increases within the relevant range, what is the effect on the fixed cost per unit?
A) It increases.
B) It decreases.
C) It remains the same.
D) It increases at first then decreases.

Question

Quizplus · Accepted Answer

Fixed costs remain constant in total within the relevant range, so as the level of activity increases, the fixed cost per unit decreases because the same total cost is spread over more units.

When the Level of Activity Increases Within the Relevant Range