Question

In the production of a product that has variable and fixed costs when the activity level increases the average cost per produ

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Answer #1

Correct Answer: Decrease

Explanation:-

total Variable Cost will be increase as activity level will be increase but unit variable cost will remain same irrespective of increase in Unit . However , total fixed cost remain same , irrespective of increase in acctivity level but due to increase in activity level , per unit fixed cost per decreased .

Finally average cost per product will be decreased due to increase in activity level.

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