Question

Question 1: Within a relevant range of output, Fixed costs are variable per unit of output and variable costs are fixed per unit of output.

Question 2: Create your own example with numbers and charts showing how Question 1 works under different levels of output.

Answer 1

1) Yes, within relevant range of output fixed costs are variable it means fixed can be increase withing no of units decrease and fixed cost per unit decrease when no uof units increase But variable cost are fixed per unit of output it means variable cost per unit fixed with in a relevant range of output

2) Example

Relevant range of output = 500-1500

variable cost per unit = 10 per unit

Fixed cost = 50000

	500 Units	1000 Units	1500 Units
Variable cost	5000	10000	15000
Fixed cost	50000	50000	50000
Total cost	55000	60000	65000
Cost per unit
Variable cost per unit	10	10	10
Fixed cost per unit	100	50	33.33
Total cost per unit	110	60	43.33

So in this example you can see variable cost per unit is fixed within relevant range of activity and fixed cost per unit is variable.