Which of the following statements is not correct?
A) The total fixed cost is constant throughout the relevant range of activity.
B) The breakeven point increases if variable costs increase.
C) The margin of safety increases if fixed costs decrease.
D) The mixed cost per unit is constant throughout the relevant range of activity.

Question

Quizplus · Accepted Answer

Mixed costs consist of both fixed and variable components. While the total mixed cost will change with the level of activity, the per-unit cost of mixed costs is not constant; it varies depending on the level of activity. This is because the fixed component of the mixed cost remains constant in total, but the variable component changes with the level of activity, affecting the per-unit cost.

Which of the Following Statements Is Not Correct