Lar Company has found that its total electricity cost has both a fixed component and a variable component within the relevant range. The variable component seems to vary directly with the number of units produced. Which one of the following statements concerning Lar's electricity cost is incorrect?
A) The total electricity cost will increase as production volume increases.
B) The total electricity cost per unit of production will increase as production volume increases.
C) The variable electricity cost per unit of production will remain constant as production volume increases.
D) The fixed electricity cost per unit of production will decline as production volume increases.

Question

Quizplus · Accepted Answer

The variable per unit component of Lar's electricity cost will remain constant over the relevant range and not change with an increase or decrease in volume.

Lar Company Has Found That Its Total Electricity Cost Has