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which of the following statement is true: the more units produced results in a lower fixed...

which of the following statement is true: the more units produced results in a lower fixed cost per unit or the more units produced results in a higher fixed cost per unit?

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Answer #1

Ans-The correct statement is :- The more units produced results in a lower fixed cost per unit.

Explanation:-

A fixed cost is an expense that does not change with an increase or decrease in the number of goods or services produced. Fixed cost paid by the company even if the business activities are not done . Examples of fixed costs are- insurance, interest expense, property taxes, utilities expenses and depreciation of assets.Fixed cost per unit  decrease with an increase in production.

Example:- A company has total fixed cost of $30,000 which it incurred while producing 10,000 units.The fixed cost is $3 per unit.

but if the company produces 20,000 units then fixed cost per unit drops to $1.5. This shows that the production of the company increase the total fixed cost decrease.

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