As production levels increase,
A) variable costs per unit decrease.
B) fixed costs per unit increase.
C) fixed costs per unit stay the same and variable costs per unit increase.
D) fixed costs per unit decrease and variable costs per unit stay the same.

Question

Quizplus · Accepted Answer

Fixed costs per unit decrease because the total fixed costs are spread over more units, reducing the cost per unit. Variable costs per unit stay the same because they change in direct proportion to the level of production.

As Production Levels Increase