Within the relevant range, how do variable and fixed costs behave?
- A Variable cost per unit stays constant while fixed cost per unit varies
- B Fixed cost per unit stays constant while variable cost per unit varies
- C Both total variable and total fixed costs stay constant
- D Both total variable and total fixed costs vary
Answer
Variable cost per unit stays constant while fixed cost per unit varies
Total variable cost changes with volume but per unit it is constant. Total fixed cost stays the same, so spreading it over more units reduces fixed cost per unit.
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