If activity level decreases, what happens to the total variable cost? It increases. It decreases. It...
If activity level decreases, what happens to the total variable
cost?
It increases.
It decreases.
It remains the same.
It depends on how much the activity level increases.
Homework Answers
Correct answer-----------It decreases.
.
If activity level decreases the total variable cost also decreases and if activity level increase then total variable cost increase as well. This is because the variable cost remains same on per unit level. Variable cost will be incurred only when production is done. On production of each unit total variable cost increase by variable cost per unit. Below given example will show the theory in numerical terms.
| Production in units (A) | 15000 | 25000 | 10000 |
| Variable cost per unit ( B) | $ 5.00 | $ 5.00 | $ 5.00 |
| Total Variable cost (A x B) | $ 75,000.00 | $ 125,000.00 | $ 50,000.00 |
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If activity level decreases, what happens to the total variable
cost?
It increases.
It decreases.
It...
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51. If the activity level increases, what happens to the total fixed cost? a. It decreases. b. It increases. c. It remains the same. d. It depends on how much the activity level increases. 52. If the activity level increases, what happens to the unit fixed cost? a. It decreases. b. It increases. c. It remains the same. d. It depends on how much the activity level increases. 53. If activity level increases, what happens to the unit variable cost?...
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