As Activity Increases, Unit Variable Cost

question 47

Multiple Choice

As activity increases, unit variable cost:

• A) increases proportionately with activity.
• B) decreases proportionately with activity.
• C) remains constant.
• D) increases by a fixed amount.
• E) decreases by a fixed amount.

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Definitions:

Supplies Cost

The expense associated with materials and other items necessary for the operation of a business or process.

Planning Budget

A budget that outlines the expected revenues, expenses, and resources over a specific period, often used as a financial roadmap.

Flexible Budget

A budget that adjusts or flexes for changes in the volume of activity, providing a more useful comparison against actual costs than a static budget.

Actual Activity

The real or factual actions or tasks completed within a period, often measured to assess performance or productivity.