Asked by Tiffani Duncan on Jun 19, 2024

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While the total amount of fixed cost remains constant with the level of production,fixed cost per unit changes as volume changes.

Fixed Cost

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums, remaining constant regardless of business activity levels.

Production Level

The quantity of items manufactured or produced in a given period, impacting costs, inventory, and capacity planning.

  • Understand the fundamentals and consequences of how costs behave on a per unit and overall cost level.
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MW
Morgan WittemanJun 24, 2024
Final Answer :
True
Explanation :
Fixed costs are expenses that do not change with the level of production or sales, such as rent or salaries. However, the fixed cost per unit decreases as production volume increases because the same total fixed cost is spread over more units, making the cost per unit lower. Conversely, if production volume decreases, the fixed cost per unit increases.