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The management expects rise in sale during Christmas therefore decides to increase the production to40,000 units. What will be the fixed costs if it decides to go ahead.
A) increase to £32 per unit
B) remain at £16 per unit
C) decrease to £8 per unit
D) total £640,000
C) decrease to £8 per unit
it depends on Maximum Capacity
if fixed cost cover Capacity for40000 unit so ,,,
when continues production fixed cost per unit will decrease to8 £
also Total Fixed Cost will remain the same when production of20000 units *16 £ =320,000
40000 units *8 £ = 320,000
decrease to £8 per unit as the fixed cost remain same whether production is doubled or reduced to half, if fixed asset is not increased.
The answer is C it will decrease to8 pounds per unit
Correct answer C. decrease to * pounds per unit
C) decrease to £8 per unit
because fixed cost per unit decrease by increase in production
The correct answer is C decrease to8 per unit
ie - 0* =,
,/0 units =8 per unit
Decreases to8, as they spent to,/- to produce0. and to produce0 also they spends, only as it is fixed
(A) when there any change in the quantity of production the fixed cost remains same in total i.e
here on producing20,000 units the total fixed cost is3,20,000 £ and that would remain same on any level of producton whether it is above20000 units or below20000 units although the fixed cost per unit will come down to8 £