As the Level of Activity Increases Within the Relevant Range

question 94

Multiple Choice

As the level of activity increases within the relevant range,

• A) total fixed costs remain unchanged.
• B) fixed costs per unit increases.
• C) total variable costs remain unchanged.
• D) variable costs per unit decreases.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up.

Plant Expansion

The process of increasing the capacity of an existing factory or plant, often involving investments in equipment, technology, or additional space.

Retained Earnings

Accumulated net income left over for a company after it has paid out dividends to its shareholders.

Prior Period Adjustment

Adjustments made to the financial statements of a prior period to correct an error or to account for a retroactive application of new accounting policies.