The correct answer is: A. does not change with volume of production.
Fixed costs are costs that do not change with the volume of production. They are typically costs that are incurred regardless of whether or not a company produces anything. Examples of fixed costs include rent, insurance, and salaries.
Fixed costs per unit are calculated by dividing fixed costs by the number of units produced. As the number of units produced increases, fixed costs per unit decrease. This is because the fixed costs are spread out over a larger number of units.
For example, if a company has fixed costs of $100,000 and produces 10,000 units, then the fixed costs per unit are $10. If the company produces 20,000 units, then the fixed costs per unit are $5.
Fixed costs per unit are important because they can affect the profitability of a company. If fixed costs per unit are high, then a company needs to produce a large number of units in order to make a profit. If fixed costs per unit are low, then a company can make a profit even if it produces a small number of units.
Here is a brief explanation of each option:
- Option A: does not change with volume of production. This is the correct answer. Fixed costs do not change with the volume of production.
- Option B: be flexible according to the rate of interest. This is not the correct answer. Fixed costs are not flexible according to the rate of interest.
- Option C: changes according to volume of production. This is not the correct answer. Fixed costs do not change according to the volume of production.
- Option D: not remains constant. This is not the correct answer. Fixed costs do remain constant.