Bagel Time produced and sold 2,500 bagels last month and incurred fixed costs totaling $8,000.If production and sales are expected to decrease by 10% next month, which of the following statements is true?

Question

Quizplus · Accepted Answer

Fixed costs remain constant regardless of the level of production or sales. Therefore, if production and sales decrease, the fixed cost per unit will increase because the same amount of fixed costs is spread over fewer units.

Bagel Time Produced and Sold 2,500 Bagels Last Month and Incurred