As Production Moves Up, the Average Cost Per Unit Decreases

question 127

Multiple Choice

As production moves up, the average cost per unit decreases because ________.

• A) variable costs decrease
• B) of increasing diseconomies of scale
• C) fixed costs are spread over more units
• D) overhead costs decrease
• E) revenue increases

---

Definitions:

Property Plant and Equipment

Long-term tangible assets owned by a company and used in its operations to generate income, including buildings, machinery, and equipment.

Assets

Resources owned or controlled by a business, expected to bring future economic benefits.

Correcting Entry

A journal entry made in an accounting ledger to correct a previously made error.

Unearned Service Revenue

Money received by a company for services yet to be provided, classified as a liability because it is an obligation to deliver services in the future.