As volume increases, average cost per unit decreases because:
A) Total fixed costs increase
B) Total variable costs increase
C) Total fixed costs stay the same
D) Total variable costs stay the same

Question

Quizplus · Accepted Answer

Total fixed costs stay the same regardless of the volume produced, so as volume increases, the fixed cost allocated to each unit decreases, leading to a decrease in the average cost per unit.

As Volume Increases, Average Cost Per Unit Decreases Because