If the volume of production is increased over the level planned, the cost per unit would be expected to:
A)Decrease for fixed costs and remain unchanged for variable costs.
B)Remain unchanged for fixed costs and increase for variable costs.
C)Decrease for fixed costs and increase for variable costs.
D)Increase for fixed costs and increase for variable costs.

Question

Quizplus · Accepted Answer

When production volume increases, fixed costs are spread over more units, decreasing the cost per unit. Variable costs per unit remain unchanged as they are constant per unit.

If the Volume of Production Is Increased Over the Level