Within the relevant range, variable costs can be expected to:
A) vary in total in direct proportion to changes in the activity level.
B) remain constant in total as the activity level changes.
C) increase on a per unit basis as the activity level increases.
D) increase on a per unit basis as the activity level decreases.

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the level of activity. Therefore, within the relevant range, variable costs can be expected to vary in total in direct proportion to changes in the activity level. For example, if a company produces 100 units and incurs $1,000 in variable costs, and then produces 200 units, it can be expected that the variable costs will double to $2,000.

Within the Relevant Range, Variable Costs Can Be Expected To