Which costs will change with a decrease in activity within the relevant range?
A) Total fixed costs and total variable costs.
B) Unit fixed cost and total variable costs.
C) Unit variable cost and unit fixed cost.
D) Unit fixed cost and total fixed costs.

Question

Quizplus · Accepted Answer

Within the relevant range, fixed costs remain constant while variable costs increase or decrease with activity levels. Therefore, a decrease in activity will not affect total fixed costs but will result in a decrease in total variable costs. As a result, unit fixed costs will increase due to the decrease in activity while total variable costs will decrease.

Which Costs Will Change with a Decrease in Activity Within