QUESTION 19 Which of the following statements are true? 1. If the activity level increases, then one would expect the fixed cost per unit to increase as well. 2. A fixed cost is a cost whose cost per unit varies as the activity level rises and falls. 3. A decrease in production will ordinarily result in a decrease in fixed production costs per unit. Only statement III is true. Statements I and II are true. Only statement II is true.
QUESTION 19 Which of the following statements are true? 1. If the activity level increases, then one would expect the fixed cost per unit to increase as well. 2. A fixed cost is a cost whose cost per unit varies as the activity level rises and falls. 3. A decrease in production will ordinarily result in a decrease in fixed production costs per unit. Only statement III is true. Statements I and II are true. Only statement II is true.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 19?
Transcribed Image Text:QUESTION 19
Which of the following statements are true?
1. If the activity level increases, then one would expect the fixed cost per unit
to increase as well.
2. A fixed cost is a cost whose cost per unit varies as the activity level rises
and falls.
3. A decrease in production will ordinarily result in a decrease in fixed
production costs per unit.
Only statement III is true.
Statements I and II are true.
Only statement II is true.
Statements I and III are true.
Expert Solution
Step 1 Introduction
The costs can be classified as variable and fixed cost. The variable cost per unit remains constant at every level of production and fixed cost remains constant at every level of production.
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