Within the relevant range, a difference between variable costs and fixed costs is:
A) variable costs per unit fluctuate and fixed costs per unit remain constant.
B) variable costs per unit are constant and fixed costs per unit fluctuate.
C) both total variable costs and total fixed costs are constant.
D) both total variable costs and total fixed costs fluctuate.

Question

Quizplus · Accepted Answer

Variable costs per unit remain constant regardless of the level of production or service activity, while fixed costs per unit fluctuate based on the level of production or service activity. As production increases, the fixed cost per unit decreases because the total fixed costs are spread over more units.

Within the Relevant Range, a Difference Between Variable Costs and Fixed