Which of the following statements is true of fixed and variable costs?
A)Both costs are constant when considered on a total basis.
B)Variable costs are constant in total,and fixed costs are constant per unit.
C)Both costs are constant when considered on a per unit basis.
D)Fixed costs are constant in total,and variable costs are constant per unit.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change with the level of production or sales,i.e they stay constant in total regardless of the number of units produced or sold. On the other hand, variable costs change in proportion to the level of production or sales,i.e they stay constant per unit of production or sale. Therefore, fixed costs are constant in total,and variable costs are constant per unit.

Which of the Following Statements Is True of Fixed and Variable