Respond that the following statements are TRUE or FALSE:

1) Fixed cost per unit is assumed to be constant within a particular relevant range of activity.

2) Total variable costs change in direct proportion to a change in volume.

3) During the current year, Simpson Inc. incurred $5,000 of fixed and $12,000 variable costs. If the number of units produced is halved next year, the company will incur $2,500 as fixed and $6,000 as variable costs.

4) Within the relevant range, the total fixed costs and the variable cost per unit remain the same.

5) Total fixed costs can change from one relevant range to another.

6) The high-low method requires the identification of lowest and highest levels of total costs, not activity, over a period of time.

Answer rating: 100% (QA)

1 FALSE ... View the full answer