Managers who forecast increases in revenue should also forecast increases in their variable cost percentages.

Question

Quizplus · Accepted Answer

Variable costs are costs that change in proportion to the level of goods or services a company produces. An increase in revenue does not necessarily mean that the variable cost percentages will increase; it means that the total variable costs will likely increase, but the percentage of variable costs relative to sales can remain constant or even decrease due to economies of scale or improved efficiency.

Managers Who Forecast Increases in Revenue Should Also Forecast Increases