Within the relevant range of activity, variable cost per unit will:
A)remain constant.
B)vary inversely with the level of activity.
C)change in some other way.
D)increase in proportion with the level of activity.

Question

Quizplus · Accepted Answer

Within the relevant range of activity, variable cost per unit will remain constant. This is because variable costs are directly proportional to the level of activity, meaning that the total variable cost will increase or decrease as the level of activity increases or decreases. However, the cost per unit will remain the same as long as the variable cost is spread over the same number of units, i.e., the activity level does not change the unit cost.

Within the Relevant Range of Activity, Variable Cost Per Unit