When analyzing alternatives,it is not advisable to use fixed costs per unit because a new fixed cost per unit must be calculated for every different volume of production.

Question

Quizplus · Accepted Answer

Fixed costs do not change with changes in volume of production, and therefore using a fixed cost per unit would not accurately reflect the total fixed costs incurred at different production volumes. A new fixed cost calculation would need to be made for each production volume in order to accurately analyze alternatives.

When Analyzing Alternatives,it Is Not Advisable to Use Fixed Costs