If production volume increases from 16,000 to 20,000 units,
A)total costs will increase by 20 percent.
B)total costs will increase by 25 percent.
C)total variable costs will increase by 25 percent.
D)mixed and variable costs will increase by 25 percent.

Question

Quizplus · Accepted Answer

If production volume increases, then total variable costs will increase because there will be more materials and labor needed to produce the additional units. However, the percentage increase in total costs cannot be determined without knowing the fixed costs involved. Mixed costs may or may not increase depending on the specific cost structure of the company.

If Production Volume Increases from 16,000 to 20,000 Units