When cost relationships are linear, total variable costs will vary in proportion to changes in:
A)Direct labor hours.
B)Total material cost.
C)Total overhead cost.
D)Volume of production.
E)Machine hours.

Question

Quizplus · Accepted Answer

When cost relationships are linear, total variable costs will vary in proportion to changes in the volume of production. This means that as the production volume increases, total variable costs will increase in proportion. Similarly, as the production volume decreases, total variable costs will decrease in proportion. This is because variable costs vary with the level of production.

When Cost Relationships Are Linear, Total Variable Costs Will Vary