If output increases by 50% and is still within the relevant range
A) total fixed costs will increase by 50%.
B) per-unit fixed cost will remain the same.
C) total variable costs will increase by 50%.
D) net income will increase by 50%.

Question

Quizplus · Accepted Answer

Total variable costs increase in direct proportion to output increases, so if output increases by 50%, total variable costs will also increase by 50%. Fixed costs remain constant in total within the relevant range, and per-unit fixed cost decreases as output increases. The effect on net income depends on various factors including the cost structure and sales price, so it cannot be determined to increase by a specific percentage without additional information.

If Output Increases by 50% and Is Still Within the Relevant