When Using a Flexible Budget, What Will Happen to Variable

question 129

Multiple Choice

When using a flexible budget, what will happen to variable costs on a per-unit basis as production increases within the relevant range?

• A) Decrease
• B) Increase
• C) Remain unchanged
• D) Fixed costs are not considered in flexible budgeting

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Definitions:

Computing Depreciation

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

Units-of-production

A depreciation method that allocates an asset's cost based on its usage, output, or units produced, rather than the passage of time.

Salvage Value

The estimated residual value of an asset at the end of its useful life, after accounting for depreciation or amortization.

Depreciation Expense

The allocated amount of an asset's cost over its useful life, used to account for declines in value over time.