The following contribution margin income statement represents the operations of Peroux Company, a small manufacturer, at a level of production of 10,000 units (assuming all units produced are sold): The relevant rage for Peroux Company is 4,000 to 12,000 units. If production and sales were to decrease to 5,000 units, which of the following would likely occur?
A) Unit variable cost would increase but unit fixed cost would not change.
B) Unit variable cost would not change, but unit fixed cost would decrease.
C) Unit variable cost and unit fixed cost would not change.
D) Unit variable cost would not change, but unit fixed cost would increase.

Question

The following contribution margin income statement represents the operations of Peroux Company, a small manufacturer, at a level of production of 10,000 units (assuming all units produced are sold):  The relevant rage for Peroux Company is 4,000 to 12,000 units. If production and sales were to decrease to 5,000 units, which of the following would likely occur?
A) Unit variable cost would increase but unit fixed cost would not change. 
B) Unit variable cost would not change, but unit fixed cost would decrease. 
C) Unit variable cost and unit fixed cost would not change. 
D) Unit variable cost would not change, but unit fixed cost would increase.

Quizplus · Accepted Answer

The Answer of The following contribution margin income statement represents the operations of Peroux Company, a small manufacturer, at a level of production of 10,000 units (assuming all units produced are sold):  The relevant rage for Peroux Company is 4,000 to 12,000 units. If production and sales were to decrease to 5,000 units, which of the following would likely occur?
A) Unit variable cost would increase but unit fixed cost would not change. 
B) Unit variable cost would not change, but unit fixed cost would decrease. 
C) Unit variable cost and unit fixed cost would not change. 
D) Unit variable cost would not change, but unit fixed cost would increase.

The Following Contribution Margin Income Statement Represents the Operations of Peroux