If the level of activity increases within the relevant range
A)variable cost per unit and total fixed costs also increase.
B)fixed cost per unit and total variable cost also increases.
C)total cost will increase and fixed cost per unit will decrease.
D)variable cost per unit and total cost also increases.

Question

Quizplus · Accepted Answer

When activity level increases within the relevant range, total costs (which include both variable and fixed costs) will increase due to the rise in variable costs. However, fixed costs are spread over more units, leading to a decrease in fixed cost per unit.

If the Level of Activity Increases Within the Relevant Range