As activity level increases, total variable costs:
A) increase proportionately with activity.
B) decrease proportionately with activity.
C) increase by a fixed amount.
D) decrease by a fixed amount.

Question

Quizplus · Accepted Answer

Total variable costs increase proportionately with activity level. This is because variable costs are directly related to the amount of production or output, so as activity level increases, the cost of materials, labor, and other variable expenses also increases.

As Activity Level Increases, Total Variable Costs