A 15% increase in production volume will result in a ________.
A) 15% increase in the variable cost per unit
B) 15% increase in total mixed costs
C) 15% increase in total administration costs
D) 15% increase in total variable costs

Question

Quizplus · Accepted Answer

A 15% increase in production volume will result in a proportionate increase in variable costs, but not in fixed or administration costs. Therefore, option D is correct. Option A is incorrect because the variable cost per unit may stay the same as it depends on the nature of the cost. Option B is incorrect because mixed costs are composed of both fixed and variable costs and may not increase proportionately with production volume. Option C is incorrect because administration costs are fixed and do not vary with production volume.

A 15% Increase in Production Volume Will Result in a ________