Answer (D) is correct . Fixed costs per unit decrease within the relevant range of activity as production increases because more units are available to absorb the constant amount of total fixed costs. Unit variable costs are assumed to remain the same per unit over the relevant range.
Answer (A) is incorrect because Fixed costs per unit decrease because there are more units to absorb the fixed costs and variable costs do not change over the relevant range.
Answer (B) is incorrect because Fixed costs per unit decrease because there are more units to absorb the fixed costs.
Answer (C) is incorrect because Variable costs per unit do not change over the relevant range.
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