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As the level of activity decreases: a) fixed cost per unit decreases. b) variable cost per...

As the level of activity decreases: a) fixed cost per unit decreases. b) variable cost per unit decreases. c) variable cost per unit increases. d) fixed cost remains constant in total.

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Answer #1

Fixed cost remains constant in total. When computed on per unit basis, fixed cost per unit decreases with the increase in the level of activity and increaees with the decrease in the level of activity.

Variable cost per unit remains constant. The total variable cost increases with the increase in the level of activity and decreases with the decrease in the level of activity.

a. Fixed cost per unit increases with the decrease in the level of activity.

b. Variable cost per unit always remains constsnt.

c. Variable cost per unit always remains constsnt.

The answer is D.

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