Published on: Jan, 20, 2011
The sum of the variable, fixed and semivariable costs (costs that cannot be classified as variable or fixed ) comprises total costs. As the volume of production increases, total costs increase. However, the cost to produce each unit of product decreases. This is because the fixed costs do not increase, they are simply spread over a larger number of units of products.
Source: Dobler, D.W., & Burt, D.N. (1996). Purchasing and Supply Management. (6th ed.). New York: McGraw Hill.
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