If the Activity Level Increases, What Happens to the Total

question 111

Multiple Choice

If the activity level increases, what happens to the total variable cost?

• A)It remains the same.
• B)It decreases.
• C)It increases.
• D)It depends on how much the activity level increases.

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Definitions:

Profits

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Interest Rate Volatility

The degree of variation of interest rates over time, impacting the valuation of financial instruments and the ability to forecast future rates.

Balance Sheets

Financial statements that summarize a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Swaps

Financial agreements to exchange or "swap" cash flows or other financial instruments between two parties, typically involving interest rates, currencies, or commodities.