When a flexible budget is used, a decrease in the output level within the relevant range...
When a flexible budget is used, a decrease in the output level within the relevant range would: a. Not change fixed costs per unit. b. Decrease total fixed costs. c. Decrease total costs. d. Increase variable costs per unit.
Homework Answers
Answer is option c - Decrease total costs
Decrease in the output level within the relevant range would decrease the total costs due to decrease in total variable costs (i,e. total variable cost would reduce as the output level decreases).
All other options are wrong because:
Fixed costs per unit will change as there is a change in output level. Hence, option a is wrong.
Total fixed costs would remain same within the relevant range of output. Hence, option b is also wrong.
Variable costs per unit remains same per unit within the relevant range but changes in total. Hence, option d is also wrong.
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