When 20,000 units are produced,fixed costs are $16 per unit.Therefore,when 16,000 units are produced,fixed costs will ________.
A) increase to $20 per unit
B) remain at $16 per unit
C) decrease to $10 per unit
D) total $160,000

Question

Quizplus · Accepted Answer

Fixed costs per unit increase when fewer units are produced because the total fixed costs are spread over fewer units. Total fixed costs remain constant, so at 16,000 units, the cost per unit is $20 ($320,000 total fixed costs / 16,000 units).

When 20,000 Units Are Produced,fixed Costs Are $16 Per Unit