In 2012 John Inc sold 10000 units of its only product If sal

In 2012 John Inc sold 10,000 units of its only product. If sales increase by 15% in the current year, unit variable cost will _____________ and unit cost fixed will ___________?

Solution

The correct option is Remain constant, Decrease.

Variable cost per unit and total fixed costs do not change with change in units.Hence when units increase with total fixed costs remaining the same;the unit cost fixed would decrease.