Variable Cost

question 70

Multiple Choice

Variable cost:

• A)increases on a per unit basis as the number of units produced increases.
• B)remains constant on a per unit basis as the number of units produced increases.
• C)remains the same in total as production increases.
• D)decreases on a per unit basis as the number of units produced increases.

Grasp the principles and assumptions underlying Cost-Volume-Profit (CVP) analysis.

Understand the high-low method's purpose and process for separating mixed costs into variable and fixed components.

Comprehend how activity levels impact variable and fixed costs.

Apply the concept of the activity index and its role in cost behavior analysis.

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Definitions:

Value Their Time

The concept referring to how individuals assign worth to the time they allocate to various activities, based on their personal priorities and economic opportunities.

Business Executives

Individuals who hold senior positions within a company, responsible for making strategic decisions to guide the organization's direction and financial success.

Retired Persons

Individuals who have ended their professional career or working life and are often eligible for certain benefits like pensions.

Opportunity Cost

The financial impact of rejecting the most viable alternative during a decision process.