When Using a Flexible Budget, What Will Happen to Variable

question 129

Multiple Choice

When using a flexible budget, what will happen to variable costs on a per-unit basis as production increases within the relevant range?

• A) Decrease
• B) Increase
• C) Remain unchanged
• D) Fixed costs are not considered in flexible budgeting

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Definitions:

Base Year

A specific year chosen as a point of reference or benchmark for financial or economic data comparison over time.

Laspeyres Index

A measure of price inflation that calculates the relative price change of a fixed basket of goods and services at current prices compared to the prices of the same basket in a base period.

Price Levels

The overall average price of all goods and services made in the economy.

Consumption Levels

The amount of goods and services consumed by an individual or population.