Fixed cost per unit increases when _______.

A. variable cost per unit increases

B. variable cost per unit decreases

C. production volume increases

D. production volume decreases

Answer: Option D

Solution(By Examveda Team)

Fixed cost per unit increases when production volume decreases. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.