Expense a Is a Fixed Cost;expense B Is a Variable

question 61

Multiple Choice

Expense A is a fixed cost;expense B is a variable cost.During the current year,the activity level has increased but is still within the relevant range.In terms of cost per unit of activity,you would expect which of the following statements to be true?

• A) Expense A has remained unchanged.
• B) Expense B has decreased.
• C) Expense A has decreased.
• D) Expense B has increaseD.

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Definitions:

Total Fixed Costs

A company's expenses that do not change with the level of production or services, such as rent, salaries, and insurance premiums.

Financial Well-being

A state where an individual has achieved a satisfactory level of financial security and freedom to make choices that allow them to enjoy life.

Short Run

A time period in which at least one input (e.g., plant size, machinery) is fixed and cannot be varied by the firm.

Economic Profit

The divergence between an organization's total turnover and its entire liabilities, including both evident and underlying costs.