What are two impacts on costs as sales volume increases?Choose 2 answers Total fixed costs will increase in direct proportion. Total fixed costs will stay the same. Total fixed costs will decrease in direct proportion. Fixed costs per unit will increase. Fixed costs per unit will decrease. Fixed costs per unit will stay the same.
Question
What are two impacts on costs as sales volume increases?Choose 2 answers Total fixed costs will increase in direct proportion. Total fixed costs will stay the same. Total fixed costs will decrease in direct proportion. Fixed costs per unit will increase. Fixed costs per unit will decrease. Fixed costs per unit will stay the same.
Solution
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Total fixed costs will stay the same: Fixed costs are expenses that do not change with the level of output or sales. Examples include rent, salaries, and insurance. Regardless of how much a company sells, these costs will remain the same.
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Fixed costs per unit will decrease: As sales volume increases, the fixed cost per unit decreases because the same amount of fixed costs is being spread over a larger number of units. For example, if a company has 10. If the company increases sales to 2,000 units, the fixed cost per unit drops to $5.
Similar Questions
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