CAF-5 · Chapter 2 · Question 2 of 10
As production volume changes, a specific cost remains constant in total but fluctuates on a per-unit basis. This cost behavior classifies the expense as a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Fixed cost
Explanation
Fixed costs remain constant in total regardless of activity levels. However, because the total cost is spread over an increasing or decreasing number of units, the fixed cost per unit fluctuates (decreases as volume rises).
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