With a Variable Cost, as the Level of Activity Decreases

question 17

True/False

With a variable cost, as the level of activity decreases, the total cost remains the same.

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Definitions:

Opening Stock

The value of inventory that a company has on hand at the beginning of an accounting period.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Overheads

Costs that do not vary with the level of production or sales activity, such as rent, salaries, and insurance.

Variable Cost Per Unit

The amount of variable expenses incurred to produce one unit of a product or service.