Asked by Mojarai Johnson on Apr 28, 2024
Verified
A decrease in production will ordinarily result in a decrease in fixed production costs per unit.
Fixed Production Costs
Manufacturing costs that remain constant regardless of the level of production, such as rent and salaries of permanent staff.
Per Unit
A term that describes costs or revenues on a single unit basis.
- Understand the behavior of fixed and variable costs in relation to production levels.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
False
Explanation :
Fixed production costs are those costs that do not vary with the level of production, such as rent and salaries. Therefore, a decrease in production will not affect these costs per unit, since they remain fixed regardless of how much is produced.
Learning Objectives
- Understand the behavior of fixed and variable costs in relation to production levels.
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