For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

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For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10,...

For a manufacturing company has total monthly fixed costs of $100,000, variable costs per units $10, income tax rate of 20%, targeted net income of $10,000.

Assume all other variables do not affect the cost volume profit relationship, if sales in units (quantities) increase, fixed cost per unit as a percentage of unit sales

	1.	increase
	2.	decrease
	3.	remain constants
	4.	we cannot find, we need more information

business accounting

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Answer 1

Answer #1

Correct answer----------decrease

.

Fixed cost in totality remains same and when production or sales increase the fixed cost per unit decrease.

Following is an example to show the above analysis

		50000 units	100000 units	110000 units
A	Total fixed cost	$ 500,000.00	$ 500,000.00	$ 500,000.00
B	Units	50000	100000	110000
C=A/B		$ 10.00	$ 5.00	$ 4.55

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Answer 2

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