Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that:
a. expense A has remained unchanged.
b. expense B has decreased.
c. expense A has decreased.
d. expense B has increased.
I answered A, but I found that the correct answer is C. Why is this so?
a. expense A has remained unchanged.
b. expense B has decreased.
c. expense A has decreased.
d. expense B has increased.
I answered A, but I found that the correct answer is C. Why is this so?