QUESTION 16 When the level of activity decreases within the relevant range, the fixed cost per unit will: O remain the same. O increase. decrease. O The effect cannot be predicted.
QUESTION 16 When the level of activity decreases within the relevant range, the fixed cost per unit will: O remain the same. O increase. decrease. O The effect cannot be predicted.
Chapter1: Financial Statements And Business Decisions
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Question 16?
Transcribed Image Text:QUESTION 16
When the level of activity decreases within the relevant range, the fixed cost per unit will:
O remain the same.
O increase.
decrease.
O The effect cannot be predicted.
Expert Solution
Step 1
Variable Cost :— It is the cost which changes with the volume of unit produced or sold. Variable cost per unit is constant for all given flexible units within the relevant range.
Fixed Cost :— It is the cost which does not depend on volume of unit produced or sold. It is constant in total for all the given flexible units within the relevant range.
Fixed Cost per unit is different for all flexible units within the relevant range.
Fixed cost per unit is calculated by dividing total fixed cost by units.
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