If the activity level decreases, what happens to the total variable cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.

Question

Quizplus · Accepted Answer

When the activity level decreases, the total variable cost also decreases. This is because fewer resources are needed to produce fewer goods or services. Conversely, if the activity level were to increase, the total variable cost would increase as more resources are required to produce more goods or services.

If the Activity Level Decreases, What Happens to the Total