Asked by Callie Idell on Jun 30, 2024
Verified
Within the relevant range, a change in activity results in a change in variable cost per unit and total fixed cost.
Variable Cost
A cost that changes in direct proportion to changes in the level of production or sales volume.
Total Fixed Cost
The sum of all constant expenses that a company incurs, regardless of the manufacturing or sales volume.
Relevant Range
The range of activity or volume over which the assumptions about fixed and variable cost behavior hold true.
- Outline the distinctions between fixed and variable costs, focusing on their behavior when production volumes change.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
False
Explanation :
Within the relevant range, a change in activity results in a change in total variable costs but does not affect the variable cost per unit or total fixed costs. Variable cost per unit remains constant with changes in activity level, and total fixed costs remain unchanged within the relevant range.
Learning Objectives
- Outline the distinctions between fixed and variable costs, focusing on their behavior when production volumes change.
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