Question - Tri-Axis Corporation manufactures aircraft components. Over the past year, demand for Tri-Axis's products has experienced an abnormal decline. This led to a temporary decrease in production at the Tri-Axis facility while fixed overhead costs have remained unchanged. The CFO of Tri-Axis has asked you to determine whether the fixed overhead cost allocated to each unit of inventory should be increased as a result of this decrease in production.
Prepare a memo detailing appropriate treatment of this issue and citing specific paragraph numbers.