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Question 1 (1 point) Expense A is a fixed cost; expense B is a variable cost. During the current year, the activity level has
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Answer #1

Expense A = Fixed cost

Expense B = Variable cost

When activity level is increased, per unit fixed cost will decrease and per unit variable cost will remain same as before. Since expense A is a fixed cost, hence it will decrease in term of cost per unit of activity when activity level is increased.

Correct option is C.

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