The effect of spreading fixed manufacturing costs over a shrinking master-budget capacity utilization amount results in ________.
A) greater utilization of capacity
B) increased unit costs
C) more competitive selling prices
D) greater demand for the product

Question

Quizplus · Accepted Answer

Spreading fixed manufacturing costs over a shrinking master-budget capacity utilization amount results in increased unit costs. This is because fixed costs are spread over a smaller number of units, resulting in higher costs per unit.

The Effect of Spreading Fixed Manufacturing Costs Over a Shrinking