When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs.

Question

Quizplus · Accepted Answer

Fixed costs do not change with the level of production or sales, but when expressed on a per unit basis, they may give the impression of being variable. This is because the fixed cost per unit decreases as production or sales increase, making it appear to vary with output.

When Expressed on a Per Unit Basis, Fixed Costs Can