Asked by Elizabeth Morrical on Jun 11, 2024
Verified
As activity level decreases, unit variable cost:
A) increases proportionately with activity.
B) decreases proportionately with activity.
C) remains constant.
D) decreases by a fixed amount.
Unit Variable Cost
The cost directly associated with producing each unit of output, varying with the level of production or sales volume.
Activity Level
The volume of production or the degree of services provided by a business, which can impact the behavior of costs and is critical in budgeting and planning.
- Explain the effect of different levels of activity on cost trends, detailing how production volume correlates with variable and fixed cost behavior.
Verified Answer
KB
Kaitlyn BarnesJun 15, 2024
Final Answer :
C
Explanation :
Unit variable cost remains constant per unit, regardless of changes in the level of activity.
Learning Objectives
- Explain the effect of different levels of activity on cost trends, detailing how production volume correlates with variable and fixed cost behavior.