As the level of activity increases how will a mixed cost in

As the level of activity increases, how will a mixed cost in total and per unit behave? In Tota Increase A) B) Increase C) Increase D) E) Decrease Per Unit Decrease Increase No effect Increase No effect Decrease Multiple Choice Choice A Choice B Choice C Choice D Choice E

Solution

Mixed costs are costs in which one component of cost is Fixed and the other component is variable

As we know, variable costs increases in total with increase in production but remains the same per unit

Similarly, Fixed costs remain the same in Total and decreases per unit with increase in production

So, as the level of activity increases, Mixed costs increase in total due to variable cost component involved and decrease per unit due to fixed cost component

So, as per above discussion, option A is the correct option and choice A is the correct option