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Why does the fixed cost per unit change?

Harold Averkamp, CPA, MBA

Definition of Fixed Cost per Unit

Fixed costs such as rent, salaries, depreciation, etc. generally do not change in total within a reasonable range of volume or activity.

On the other hand, the fixed cost per unit will change as volume or the level of activity changes.

Example of Fixed Costs per Unit

Assume that a company has two fixed costs: rent is $2,500 per month and salaries are $3,500 per month. The total fixed costs of $6,000 per month will not change when the volume is within the range of 3,000 units to 4,000 units per month.

However, the fixed cost per unit will change with any change in volume. For example, if the volume is 3,000 units, the fixed cost per unit will be $2.00 ($6,000 of fixed costs divided by 3,000 units). If the volume is 4,000 units, the fixed cost per unit will be $1.50 ($6,000 of fixed costs divided by 4,000 units).

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on

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