Select the correct statement regarding fixed costs.
A) There is a contradiction between the term "fixed cost per unit" and the behavior pattern implied by the term.
B) Fixed cost per unit is not fixed.
C) Total fixed cost remains constant when volume changes.
D) All of these are correct statements.

Question

Quizplus · Accepted Answer

All statements are correct regarding fixed costs. "Fixed cost per unit" does imply a contradiction because while total fixed costs remain constant regardless of volume, the fixed cost per unit changes inversely with the volume of production or sales. As volume increases, the fixed cost per unit decreases, and vice versa, highlighting that the per-unit measure is not fixed. Total fixed costs, however, do remain constant with changes in volume, which is a fundamental characteristic of fixed costs.

Select the Correct Statement Regarding Fixed Costs