Iguana Company sells a single product. Iguana estimates demand and costs at various activity levels as follows:
|
Units Sold
|
Price
|
Total Variable Costs
|
Fixed Costs
|
|
120,000
|
$48
|
$3,000,000
|
$1,000,000
|
|
140,000
|
$45
|
$3,500,000
|
$1,000,000
|
|
160,000
|
$40
|
$4,000,000
|
$1,000,000
|
|
180,000
|
$35
|
$4,500,000
|
$1,000,000
|
|
200,000
|
$30
|
$5,000,000
|
$1,000,000
|
How would you best describe Iguana's variable cost per unit over the range shown?
a) It is decreasing as volume increases.
b) It is first increasing as volume increases, then decreasing.
c) It is constant.
d) It is increasing as volume increases.