178k views
2 votes
To facilitate decision-making, should fixed expenses be expressed on a per-unit basis?

1) Yes
2) No

User Majid Sadr
by
8.1k points

1 Answer

3 votes

Final answer:

Fixed expenses are not typically expressed on a per-unit basis because they do not vary with the number of units produced. Variable expenses, on the other hand, are typically expressed on a per-unit basis as they change based on production levels.

Step-by-step explanation:

Fixed expenses are costs that do not change regardless of the level of production. They include expenses like rent, machinery costs, and advertising expenses. Fixed expenses are not typically expressed on a per-unit basis because they do not vary with the number of units produced. Instead, they are usually expressed as total costs or as a lump sum. For example, if the monthly rent for a factory space is $10,000, it remains the same whether the company produces one unit or a thousand units.

On the other hand, variable expenses are costs that vary with the level of production. They include expenses like raw materials and labor costs. Variable expenses are typically expressed on a per-unit basis because they change based on the number of units produced. For example, if the cost of raw materials for one unit of production is $10, the cost for producing ten units would be $100.

In summary, while variable expenses are expressed on a per-unit basis, fixed expenses are not.

User Vladimir Mitrovic
by
8.5k points