If the activity level increases 10% total variable costs will
A) remain the same.
B) increase by more than 10%.
C) decrease by less than 10%.
D) increase 10%.

Question

Quizplus · Accepted Answer

When the activity level increases by 10%, the total variable costs will increase by the same percentage. This is because variable costs are directly proportional to the level of activity. Therefore, option D (increase by 10%) is the correct choice.

If the Activity Level Increases 10% Total Variable Costs Will