MANAGEMENT

Detailed explanation-1: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.

Detailed explanation-2: -The relevant range of operations is the normal operating range for a business, with existing machinery. On a per unit basis, as the level of production changes the fixed cost per unit of output decreases as volume increases (and vice versa).

Detailed explanation-3: -Fixed cost per unit decreases when volume increases. Explanation: Total fixed cost incurred by a firm does not change with production volume within a relevant range for a given period.

Detailed explanation-4: -Fixed costs do not change with increases/decreases in units of production volume, while variable costs fluctuate with the volume of units of production. Fixed and variable costs are key terms in managerial accounting, used in various forms of analysis of financial statements.

Detailed explanation-5: -However, the fixed cost per unit will change with any change in volume. For example, if the volume is 3, 000 units, the fixed cost per unit will be $2.00 ($6, 000 of fixed costs divided by 3, 000 units). If the volume is 4, 000 units, the fixed cost per unit will be $1.50 ($6, 000 of fixed costs divided by 4, 000 units).