CIMA BA2 · Chapter 2 · Question 5 of 8
As the level of activity increases within the relevant range, what happens to FIXED cost per unit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It decreases
Explanation
Total fixed cost does not change within the relevant range, so the same total is spread over more units as activity rises. Fixed cost per unit therefore falls as output increases.
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