Asked by Chasity Fields on Jun 26, 2024

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Within the relevant range, a difference between variable costs and fixed costs is:

A) variable costs per unit fluctuate and fixed costs per unit remain constant.
B) variable costs per unit are constant and fixed costs per unit fluctuate.
C) both total variable costs and total fixed costs are constant.
D) both total variable costs and total fixed costs fluctuate.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold within a specific timeframe, including rent, salaries, and insurance premiums.

Relevant Range

The range of operating activity within which the assumptions about fixed and variable cost behaviors remain valid.

Fluctuate

To change or vary irregularly in number, amount, volume, or intensity.

  • Categorize expenses according to whether they are fixed, variable, or mixed, depending on their response to changes in production levels.
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LM
Lindsay McCalebJun 28, 2024
Final Answer :
B
Explanation :
Variable costs per unit remain constant regardless of the level of production or service activity, while fixed costs per unit fluctuate depending on the volume of production or service activity. As production increases, the fixed cost per unit decreases because the total fixed costs are spread over more units.