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Chapter 21: Q-21-7RQ (page 1166)

Explain why the fixed manufacturing overhead cost per unit changes when there is a change in the number of units produced.

Short Answer

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Answer

Fixed manufacturing overhead cost per unit changes with a change in the number of units because total fixed cost remains constant and fixed manufacturing overhead cost per unit has an inverse relation with the number of units.

Step by step solution

01

Fixed manufacturing overhead

Fixed manufacturing overheads are the sunk cost to the company which remains constant in total and do not show deviation in total with the change in production level.

02

Why does the fixed manufacturing overhead cost per unit change when there is a change in the number of units produced.

The fixed manufacturing overhead cost per unit changes with change in number of units produced because fixed manufacturing overhead remains constant in total and fixed manufacturing overhead cost per unit has an inverse relation with the number of units.

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