For a fixed cost, as volume increases:
A) the cost behaviour depends on the type of fixed cost involved.
B) total fixed costs remain constant and fixed costs per unit increase.
C) both total fixed costs and fixed costs per unit remain constant.
D) total fixed costs remain constant and fixed costs per unit decrease.

Question

Quizplus · Accepted Answer

When volume increases, the total fixed costs remain constant as they are not affected by the change in volume. However, the fixed costs per unit decrease as the same fixed cost is spread over a larger quantity of output. Thus, the correct choice is D.

For a Fixed Cost, as Volume Increases