Which costs will change with an increase in activity within the relevant range *?

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Which cost will change with an increase in activity within the relevant range?
What happens if production increases within a relevant range?
Which type of costs will change with a decrease in activity within the relevant range?
Which cost changes when activity changes?

exam 1 Fall14

Student:

___________________________________________________________________________

1. If the level of activity increases within the relevant range:

A. variable cost per unit and total fixed costs also increase.

B. fixed cost per unit and total variable cost also increase.

C. total cost will increase and fixed cost per unit will decrease.

D. variable cost per unit and total cost also increase.

2. Data for Cost A and Cost B appear below:

Which of the above best describes the behavior of Costs A and B?

A. Cost A is fixed, Cost B is variable.

B. Cost A is variable, Cost B is fixed.

C. Both Cost A and Cost B are variable.

D. Both Cost A and Cost B are fixed.

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Which cost will change with an increase in activity within the relevant range?

In a manufacturing process, there are different types of costs. One of those cost profiles is a variable cost that only increases if the quantity of output also increases. While a fixed cost remains the same over a relevant range, a variable cost usually changes with every incremental unit produced.

What happens if production increases within a relevant range?

Answer and Explanation: Within the relevant range, the total fixed cost remains the same regardless of the level of activity. When the productions levels increase, the fixed cost is spread across the additional units. So, the fixed cost per unit will decrease as the level of activity increases.

Which type of costs will change with a decrease in activity within the relevant range?

Unit fixed costs and total variable cost will change with a decrease in activity within the relevant range. Fixed costs are costs that are fixed in total and does not vary in relation to the changes in activity level, therefore as per unit of activity level decreases, the fixed cost per unit would increase.

Which cost changes when activity changes?

Variable costs Some costs, such as the cost of direct material, vary with the level of activity and are known as variable costs. These costs tend to vary directly with variations in the level of activity and change every time small changes in activity occur.