Asked by CECILIA SIOCO on Jun 04, 2024
Verified
If the activity index decreases total variable costs will decrease proportionately.
Activity Index
A measurement used to assess the level or rate of operations or actions within a particular area, often in relation to productivity or economic indicators.
Variable Costs
Costs that change in proportion to the level of production or sales volume.
- Master the understanding of how variations in activity intensity alter both variable and fixed outlays.
Verified Answer
HV
Hunter VandiverJun 04, 2024
Final Answer :
True
Explanation :
Total variable costs are directly related to the level of activity, hence if the activity index decreases, the total variable costs will also decrease proportionately.
Learning Objectives
- Master the understanding of how variations in activity intensity alter both variable and fixed outlays.