The planning horizon for a discretionary fixed cost usually encompasses many years.

Question

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A change in activity does not affect total fixed costs, as they remain constant regardless of changes in production or sales. However, fixed costs expressed on a per unit basis will decrease as activity levels increase, and increase as activity levels decrease. This is because the same amount of fixed costs is spread over a greater or smaller number of units, respectively.

The Planning Horizon for a Discretionary Fixed Cost Usually Encompasses