Say a company's total costs are $2,500,000 when 100,000 units are made. Of the total cost, $400,000 is fixed. Assume all volumes referenced in the question fall within the relevant range.

What are the expected total costs when 120,000 units are made?

A.

$3,400,000

B.

$2,500,000

C.

$2,520,000

D.

$3,000,000

E.

$2,920,000

Your answer is correct.

If volume increases, what happens to the variable cost per unit?

A.

The variable cost per unit decreases.

B.

The variable cost per unit increases.

C.

The variable cost per unit does not change.

Your answer is correct.

If volume decreases, what happens to the total variable costs?

A.

Total variable costs decrease.

Your answer is correct.

B.

Total variable costs increase.

C.

Total variable costs do not change.

If volume increases, what happens to the fixed cost per unit?

A.

The fixed cost per unit does not change.

B.

The fixed cost per unit increases.

C.

The fixed cost per unit decreases.

Your answer is correct.

If volume decreases, what happens to the total fixed costs?

A.

Total fixed costs decrease.

B.

Total fixed costs do not change.

Your answer is correct.

C.

Total fixed costs increase. 1st EditionGlencoe McGraw-Hill548 explanations

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