   Chapter 11, Problem 3CDQ

Chapter
Section
Textbook Problem

Describe the behavior of (a) total fixed costs and (b) unit fixed costs as the level of activity increases.

To determine

Concept Introduction:

Variable, Fixed and Mixed Cost:

There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced. The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.

To Indicate:

The behavior of Total fixed costs and unit fixed costs with change in the level of activity

Explanation

There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced...

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