Within the relevant range, the difference between variable costs and fixed costs is:
A)both total variable costs and total fixed costs fluctuate.
B)variable costs per unit fluctuate and fixed costs per unit remain constant.
C)variable costs per unit are constant and fixed costs per unit fluctuate.
D)both total variable costs and total fixed costs are constant.

Question

Quizplus · Accepted Answer

Variable costs per unit remain constant within the relevant range, meaning the cost per unit does not change with the level of production or activity. Fixed costs per unit fluctuate within the relevant range because as the level of production or activity changes, the fixed cost spread over each unit changes, making the per unit cost vary inversely with activity level.

Within the Relevant Range, the Difference Between Variable Costs and Fixed