Within the relevant range, the variable cost per unit is constant for all levels of production but varies in total based on the output produced. As the number of units increases, the total variable cost increases. Within the relevant range, the total fixed cost remains constant.
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acct 2302 test 2 chap20 Flashcards – Quizlet
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What is within the relevant range of activity?
The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.
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When production increases over the relevant range what happens to variable cost per unit?
The total fixed costs do not change with the increase in the production volume within the relevant range for a given period of time. Therefore, the fixed cost per unit remains the same. On the other hand, total variable costs increase with the increase in the production volume.
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Which cost is within the relevant range a cost that changes in direct proportion to changes in the activity level?
Variable Costs. A variable cost is one whose total dollar amount varies in direct proportion to changes in the activity level.
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Is it true that variable costs remain fixed in total within the relevant range of activity True False question True False?
Answer and Explanation: The given statement is false. Relevant range refers to the range of activity in which total fixed cost remains constant in total and not in per unit, whereas total variable cost remains constant in per unit and not in total.
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What is the relevant range of activity?
Relevant Range: The relevant range is the range of activity (e.g., production or sales) over which these relationships are valid. For example, if the factory is operating at capacity, increasing production requires additional investment in fixed costs to expand the facility or to lease or build another factory.
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What is within the relevant range variable costs?
Within the relevant range, the variable cost per unit is constant for all levels of production but varies in total based on the output produced. As the number of units increases, the total variable cost increases. Within the relevant range, the total fixed cost remains constant.
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What happens when the activity level increases within the relevant range?
Answer and Explanation: When the level of activity increases within the relevant range, the average cost per unit will fall as fixed costs per unit decrease. Total variable costs will increase as they are tied to increases in activity.
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Why is it important to stay within the relevant range when estimating costs?
Why is relevant range important? Relevant range is important because if you make the assumption that all of your costs will remain constant, whether they are fixed or variable, you may make errors on your projections.
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What happens to variable cost per unit when production increases?
The variable cost of production is a constant amount per unit produced. As the volume of production and output increases, variable costs will also increase. Conversely, when fewer products are produced, the variable costs associated with production will consequently decrease.
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What happens when the production increases with the relevant range?
Answer and Explanation: If the company increases production within the relevant range of activity, they can expect the B. no change in the fixed cost per unit to and there to be an increase in variable cost per unit.
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When production increases over the relevant range what happens to fixed cost per unit?
Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
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How does relevant range affect variable costs?
With variable costs then, the relevant range will be the range where the cost of adding one more, will be the same as the last. In this example, from 0-100 widgets, each additional widget will add $1 in cost to our direct materials. Once we go above 100, we are outside of the relevant range.
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What is within the relevant range variable cost?
Within the relevant range, the variable cost per unit is constant for all levels of production but varies in total based on the output produced. As the number of units increases, the total variable cost increases. Within the relevant range, the total fixed cost remains constant.
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Which type of cost changes in total in direct proportion to changes in activity level multiple choice question fixed variable differential opportunity?
Answer and Explanation: A cost that changes in proportion to changes in volume of activity is called c) a variable cost.
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What is within the relevant range of activity?
The relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or expense levels can be expected to occur. Outside of that relevant range, revenues and expenses will likely differ from the expected amount.
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