Jeong Company incurs both fixed and variable production costs.Assuming that production is within the relevant range,if volume goes up by 20%,then the total costs would ________.
A) increase by 20%
B) remain the same
C) increase by an amount less than 20%
D) decrease by 20%

Question

Quizplus · Accepted Answer

Since Jeong Company incurs both fixed and variable production costs, an increase in production volume will result in an increase in variable costs but fixed costs will remain constant. This means the total costs will increase by an amount less than 20%, as the increase in variable costs is offset by the constant fixed costs.

Jeong Company Incurs Both Fixed and Variable Production Costs