Asked by Haktan Öztürkçü on Jul 11, 2024
Verified
Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.
Variable Costs
Costs that change in proportion to the level of production or sales activity, such as raw materials or direct labor.
Direct Proportion
A relationship between two variables where an increase in one results in a proportional increase in the other.
Activity Level
In accounting and management, refers to the volume of units produced, hours worked, or any other measure of output that drives the costs in a business.
- Classify and interpret variable, fixed, and mixed costs comprehensively.
- Compare costs based on their behavior per unit versus their total variation with activity level changes.
Verified Answer
Learning Objectives
- Classify and interpret variable, fixed, and mixed costs comprehensively.
- Compare costs based on their behavior per unit versus their total variation with activity level changes.
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