Last month,when 10,000 units of a product were manufactured,the cost per unit was $60.At this level of activity,variable costs are 50% of total unit costs.If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:
A)total variable cost will remain unchanged.
B)fixed costs will increase in total.
C)variable cost per unit will increase.
D)total cost per unit will decrease.

Question

Quizplus · Accepted Answer

When production increases, fixed costs are spread over more units, reducing the total cost per unit. Variable costs per unit remain constant, so the total cost per unit decreases.

Last Month,when 10,000 Units of a Product Were Manufactured,the Cost