Changes in activity have a(n) _________ effect on fixed costs per unit.
A) positive
B) negative
C) inverse
D) neutral

Question

Quizplus · Accepted Answer

Changes in activity have an inverse effect on fixed costs per unit. As activity level (production volume) increases, the fixed cost per unit decreases because the total fixed costs are spread over more units. Conversely, if the activity level decreases, the fixed cost per unit increases.

Changes in Activity Have A(n) _________ Effect on Fixed Costs