If an entity increases its level of activity:
A) some costs will vary, others will remain the same.
B) all costs will vary.
C) all costs will remain the same.
D) most costs will rise.

Question

Quizplus · Accepted Answer

Some costs will vary, others will remain the same. This is because of a concept called the "cost behavior," where some costs are fixed, while others are variable. Fixed costs remain the same regardless of the level of activity, while variable costs change based on it. Therefore, as the level of activity increases, some costs will change, while others will remain constant.

If an Entity Increases Its Level of Activity