As the Volume of Output Increases

question 53

Multiple Choice

As the volume of output increases:

• A)Variable costs per unit will increase.
• B)Variable costs per unit will decrease.
• C)Variable costs per unit will not change.
• D)Variable costs in total will decrease.

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Definitions:

Variable Cost

A cost that changes in proportion with the level of output or activity; in contrast to fixed costs, which remain constant regardless of activity.

Transfer Price

The price at which goods or services are transferred between departments or divisions within the same company.

Increase in Income

A rise in the amount of money received, especially by a business or individual, over a certain period.

Variable Cost

A cost that varies with the level of output or production volume, such as materials and labor.