Which of the following is directly associated with a higher denominator level of activity?
A) Higher unit product cost.
B) Lower unit product cost.
C) Frequent occurrence of a volume variance.
D) More profitable operations.

Question

Quizplus · Accepted Answer

A higher denominator level of activity means a larger denominator in the cost formulas, which results in a lower unit product cost. This is because the fixed costs are spread over a larger number of units, reducing the cost per unit. Therefore, a lower unit product cost is directly associated with a higher denominator level of activity.

Which of the Following Is Directly Associated with a Higher