Regarding Overhead Costs, as Volume Increases

question 117

Multiple Choice

Regarding overhead costs, as volume increases:

• A) Unit fixed cost increases, unit variable cost decreases.
• B) Unit fixed cost decreases, unit variable cost increases.
• C) Unit variable cost decreases, unit fixed cost remains constant.
• D) Unit fixed cost decreases, unit variable cost remains constant.
• E) Both unit fixed cost and unit variable cost remain constant.

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Definitions:

Marginal Product

The additional output produced as a result of adding one more unit of a particular input, keeping other inputs constant.

Average Product

The ratio of total product to the amount of input used, determined by dividing the overall output by the input quantity.

Average Product

The average amount of output produced per unit of a specific input, like labor or capital, over a certain period.