What Will Result from an Increase in the Activity Level

question 85

Multiple Choice

What will result from an increase in the activity level within the relevant range?

• A) An increase in fixed cost per unit.
• B) A proportionate increase in total fixed costs.
• C) An unchanged fixed cost per unit.
• D) A decrease in fixed cost per unit.

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Definitions:

Split-off Point

In process costing, the stage in production where multiple products emerge from a single process and continue to be processed further or sold as is.

Joint Production Costs

Costs that are incurred up to the split-off point in a process that produces multiple products.

Absorption Costing

This accounting style integrates all facets of manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—into the comprehensive cost of a product.

Markup

The amount added to the cost of goods to cover overhead and profit, determining the selling price.