Which of the following is true as process type changes from batch to continuous?
A) Unit variable costs decrease, and initial fixed costs decrease.
B) Initial fixed costs increase, while unit variable costs decrease.
C) Unit variable costs increase, and initial fixed costs increase.
D) Initial fixed costs decrease, while unit variable costs increase.

Question

Quizplus · Accepted Answer

As process type changes from batch to continuous, initial fixed costs generally increase due to the need for specialized equipment and infrastructure. However, unit variable costs tend to decrease due to economies of scale and higher efficiency in the production process. Therefore, option B is correct.

Which of the Following Is True as Process Type Changes