For Any Volume of Activity, Total Costs Are

question 28

Multiple Choice

For any volume of activity, total costs are:

• A)Fixed costs + (Unit variable costs x Volume of activity).
• B)Fixed costs + (Total variable costs/volume of activity).
• C)Variable costs + (Unit fixed costs x Volume of activity).
• D)Variable cost + (Total fixed costs/volume of activity).
• E)None of the above.

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Definitions:

Fixed Inspection Cost

A cost that remains constant for a specific period regardless of the level of goods produced or inspected.

Machine-Hours

Machine-hours are a measure of the amount of time a machine is operated, used in manufacturing to allocate costs to products.

Relevant Range

It refers to the span of activity within which the assumptions about fixed and variable cost behaviors hold true.

Contribution Margin

The amount of revenue left after deducting all variable costs associated with producing and selling a product, indicating how much contributes towards covering fixed costs and generating profits.