How do variable costs per unit behave? A. They remain the same throughout production levels within the relevant range. B. They decrease as production decreases. C. They increase as production decreases. D. They decrease as production increases.

Question

Elianna Ochoa

Business

13 July, 22:45

How do variable costs per unit behave? A. They remain the same throughout production levels within the relevant range. B. They decrease as production decreases. C. They increase as production decreases. D. They decrease as production increases.

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Answers (1)

Know the Answer?

Mira Hardy · Answer 1

The correct answer is option A.

Explanation:

The relevant range can be defined as the level of activity that is limited by a maximum and minimum amount. Outside this range, costs and benefits are likely to differ from the expected amount.

In the relevant range, the fixed costs remain the same and the variable cost per unit remains constant as well. The total variable cost will vary with the volume of production.