Multiple Choice
Which of the following accounting career pathways primarily involves managing and analyzing money within organizations?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
Which of the following statements about variable costs is true?
A
Variable costs remain constant in total regardless of activity level.
B
Variable costs are not affected by changes in production volume.
C
Variable costs change in total in direct proportion to changes in activity level.
D
Variable costs per unit increase as production increases.
Verified step by step guidance1
Understand the concept of variable costs: Variable costs are costs that change in total in direct proportion to changes in activity level or production volume. Examples include direct materials and direct labor costs.
Analyze the first statement: 'Variable costs remain constant in total regardless of activity level.' This is incorrect because variable costs fluctuate based on activity level.
Evaluate the second statement: 'Variable costs are not affected by changes in production volume.' This is also incorrect because variable costs are directly tied to production volume.
Examine the third statement: 'Variable costs change in total in direct proportion to changes in activity level.' This is correct because it aligns with the definition of variable costs.
Review the fourth statement: 'Variable costs per unit increase as production increases.' This is incorrect because variable costs per unit remain constant regardless of production volume, while the total variable cost changes with activity level.
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