Variable Costs Within the Relevant Range

question 185

Multiple Choice

Variable costs within the relevant range

• A) stay constant on a per unit basis as output changes.
• B) increase in total as output increases.
• C) decrease in total as output decreases.
• D) All of these are correct.

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Definitions:

Revenue Variance

The variance between projected revenue and the actual income received.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Costs

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

Net Operating Income

The profit generated from a company's everyday business operations, calculated by subtracting operating expenses from the gross income.