If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will:
A)shift downward and have a steeper slope.
B)shift downward and have a flatter slope.
C)shift upward and have a flatter slope.
D)shift upward and have a steeper slope.

Question

Quizplus · Accepted Answer

Decreasing the variable expenses per unit means that the total variable expenses will decrease, leading to a shift downward in the total expense line. However, increasing the total fixed expenses will lead to a shift upward in the total expense line. Combining these changes, the total expense line will shift upward and have a flatter slope, as the decrease in variable expenses per unit will not be enough to offset the increase in fixed expenses.

If a Company Decreases the Variable Expense Per Unit While