Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold. If the company's volume doubles,the total cost per unit will:
A) stay the same.
B) decrease.
C) double as well.
D) increase but will not double.

Question

Quizplus · Accepted Answer

When volume doubles, fixed costs remain the same ($40,000) while variable costs double ($50,000 to $100,000). The total cost per unit decreases because the fixed cost is spread over more units.

Wu Company Incurred $40,000 of Fixed Cost and $50,000 of Variable