Question

What affect a sales volume increase or decrease will have on unit fixed cost, unit variable cost, total fixed cost, and total variable cost?

Answer 1

Fixed Cost:

Total remains unchanged at total level.

And are variable at unit level, increase at lower level and decrease as higher level.

Variable Cost:

At unit cost, are the same, are the cost of producing one unit.

At total variable cost, it will increase along with sales and decrease when the sales are lower.

Step-by-step explanation:

The unit fixed cost will be variable at unit level. As this amount will be distribute over more or less units.

So an increase of sales, decrease the unit fixed cost

and decrease of sales, increase the unit fixed cost

At total level, the fixed cost are the same for hte relevant range.