Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that:

A) expense A has remained unchanged.
B) expense A has decreased.
C) expense B has decreased.
D) expense B has increased.

Variable Cost

A cost that varies with the level of output or activity, such as raw materials, labor, and utility expenses.

Fixed Cost

Costs that remain constant regardless of the amount of goods produced or sold, like lease payments, employee wages, and insurance premiums.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors hold true for a specific entity.