iclivity based costing, a cost driver is any factor or activity that has a direct cause-effect relationship with the resources consumed. The fixed cost per unit varies with changes in the level of activity. The range of activity over which changes in cost are of interest to management is called the relevant range. Variable costs are costs that vary in total in direct proportion to changes in the activity level. Direct materials and direct labor costs are examples of variable costs of production. Total variable costs change as the level of activity changes. Unit variable cost does not change as the number of units of activity changes. 8. A mixed cost has characteristics of both a variable and a fixed cost. 19. The ratio that t indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio. 20. Cost-volume-profit analysis can be presented in both equation form and graphic form