Which of the Following Describes the Behavior of a Variable

question 231

Multiple Choice

Which of the following describes the behavior of a variable cost per unit?

• A)It varies in increasing proportion with changes in the activity level.
• B)It varies in decreasing proportion with changes in the activity level.
• C)It remains constant with changes in the activity level.
• D)It varies in direct proportion with the activity level.

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Definitions:

Standard Hours Per Unit

The estimated time required to produce one unit of a product under standard operating conditions.

Actual Output

The real quantity of goods or services produced by a company, as opposed to estimated or planned production levels.

Standard Cost System

An accounting system that uses predetermined costs for products or services to facilitate variance analysis and budgeting.

Direct Labour Hours

Total hours accumulated by workers directly involved in the fabrication process.