When the activity level is expected to decline within the relevant range, what effects would be anticipated with respect to each of the following?
A)Fixed cost per unit - INCREASE; Variable cost per unit - NO CHANGE
B)Fixed cost per unit - INCREASE; Variable cost per unit - INCREASE
C)Fixed cost per unit - NO CHANGE; Variable cost per unit - NO CHANGE
D)Fixed cost per unit - NO CHANGE; Variable cost per unit - INCREASE

Question

Quizplus · Accepted Answer

When activity levels decline, fixed costs per unit increase because the total fixed costs are spread over fewer units. Variable costs per unit remain unchanged because they vary directly with the level of activity.

When the Activity Level Is Expected to Decline Within the Relevant