Given a relevant range, which ONE of the following statements is TRUE? Group of answer choices

a. A fixed cost is fixed in total and decreases per unit as the number of units increases.

b. A variable cost is fixed in total and decreases per unit as the number of units increases.

c. A variable cost is variable in total and decreases per unit as the number of units increases.

d. A variable cost is variable in total and increases per unit as the number of units increases.

Question

Business

Carpenter

1 June, 04:28

Given a relevant range, which ONE of the following statements is TRUE? Group of answer choices

a. A fixed cost is fixed in total and decreases per unit as the number of units increases.

b. A variable cost is fixed in total and decreases per unit as the number of units increases.

c. A variable cost is variable in total and decreases per unit as the number of units increases.

d. A variable cost is variable in total and increases per unit as the number of units increases.

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Answers (1)

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Aussie · Answer 1

d. A variable cost is variable in total and increases per unit as the number of units increases.

Explanation:

A variable cost is that which changes with changes in levels of production; if production increases, the variable cost increases and vice versa. An example is cost of raw materials, electricity. The more finished goods a company produces, the more the raw materials and electricity will be needed to meet that level of production capacity. Unlike variable costs, fixed costs do not change with changes in levels of production. An example is rent.