Expense A is a fixed cost; expense B is a variable cost.During the current year,the activity level has increased but is still within the relevant range.In terms of cost per unit of activity,you would expect which of the following statements to be true?
A) Expense A has remained unchanged.
B) Expense B has decreased.
C) Expense A has decreased.
D) Expense B has increased.

Question

Quizplus · Accepted Answer

Fixed costs per unit decrease as the activity level increases, while variable costs per unit remain constant. Since Expense A is a fixed cost, its cost per unit of activity would decrease with increased activity levels.

Expense a Is a Fixed Cost; Expense B Is a Variable