As activity decreases what happen with unit variable cost?

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1186554

2026-03-31 16:10

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As activity decreases, unit variable costs typically remain constant since they are incurred on a per-unit basis regardless of the level of production. However, if production falls below a certain level, fixed costs may become spread over fewer units, potentially increasing the overall unit cost. In essence, while variable costs per unit do not change with activity levels, the total cost per unit can rise due to the allocation of fixed costs.

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