When the Level of Activity Decreases Within the Relevant Range

question 306

Multiple Choice

When the level of activity decreases within the relevant range, the fixed cost per unit will:

• A) decrease.
• B) increase.
• C) remain the same.
• D) The effect cannot be predicted.

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Definitions:

Present Value

The contemporary monetary evaluation of a future sum of money or series of cash flows, discounted by a particular rate of return.

Payment Plan

An agreement to pay back a sum of money owed over a period of time in a series of installments.

Account Earning

Interest or returns generated from an investment account or savings account over a period.