21 PP Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,

Question

21

PP Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?

A)

Total fixed costs will decrease.

B)

Fixed cost per unit will decrease.

C)

Total fixed costs will increase.

D)

Fixed cost per unit will increase.

21

PP Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?

A)

Total fixed costs will decrease.

B)

Fixed cost per unit will decrease.

C)

Total fixed costs will increase.

D)

Fixed cost per unit will increase.

Explanation / Answer

PP Pizza Amts in $ Details Last Month Next month Units Produced & Sold              2,000                2,200 Fixed cost              6,000                6,000 Fixed cost/Unit                3.00                   2.73 So with increasing Production and sales Fixed cost per unit will decrease. Statement B. is true.

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