Question: Saved During the current year, the activity level has increased but is still within the relevant range. In terms of cost per unit of activity,
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During the current year, the activity level has increased but is still within the relevant range. In terms of cost per unit of activity, you would expect which of the following statements to be true?
Question options:
Fixed cost per unit has remained unchanged.
Variable cost per unit has decreased.
Fixed cost per unit has decreased.
Variable cost per unit has increased.
Question point
Which costs will change with a decrease in activity within the relevant range?
Question options:
Total fixed costs and total variable costs.
Unit fixed cost and total variable costs.
Unit variable cost and unit fixed cost.
Answer of text
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Within the relevant range of activity, how will variable cost per unit behave?
Question options:
It will increase in proportion with the level of activity.
It will remain constant.
It will vary inversely with the level of activity.
Its behaviour cannot be determined without additional information.
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What will result from an increase in the activity level within the relevant range?
Question options:
An increase in fixed cost per unit.
A proportionate increase in total fixed costs.
An unchanged fixed cost per unit.
Answer of text
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The linear equation Y a bX is often used to express cost formulas. Which of the following representations in this equation is correct?
Question options:
The term b represents variable cost per unit of activity.
The term a represents variable cost in total.
The term X represents total costs.
The term Y represents total fixed costs.
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