Regarding overhead costs, as volume increases:
A) Unit fixed cost increases, unit variable cost decreases.
B) Unit fixed cost decreases, unit variable cost increases.
C) Unit variable cost decreases, unit fixed cost remains constant.
D) Both unit fixed cost and unit variable cost remain constant.
E) Unit fixed cost decreases, unit variable cost remains constant.

Question

Quizplus · Accepted Answer

As volume increases, the unit fixed cost decreases because the total fixed cost is spread over more units, while the unit variable cost remains constant as it is directly proportional to the volume.

Regarding Overhead Costs, as Volume Increases