Question

Green T-Shirt Processing incurs only fixed and variable costs in its operations. When 10,000 T-shirts are produced, the company’s managerial accountant noted a fixed cost per shirt of $1.00 and a variable cost per pot of $6.00.

If production is expected to increase, which of the following statements is true?a. The fixed cost per T-shirt will not change; the variable cost per T-shirt will decrease.b. Total fixed costs will decrease; the variable cost per T-shirt will not change.c. The fixed cost per T-shirt will decrease; the variable cost per T-shirt will increase.d. Total fixed costs will remain unchanged; total variable costs will increase

Answer 1

.d. Total fixed costs will remain unchanged; total variable costs will increase

Step-by-step explanation:

Fixed cost is cost that does not vary with production e.g rent

Variable costs are costs that vary with production. If production increases, variable costs rises and if production is reduced, variable cost falls. Examples of variable costs are wages and cost of raw materials.

If production increases, more workers and raw materials would be needed, so variable cost would increase.

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