Zodiac Company's total costs are increasing in direct proportion to the increases in activity levels. The company's cost structure must have all:

Question

Quizplus · Accepted Answer

Since Zodiac Company's total costs are increasing in direct proportion to increases in activity levels, it indicates that the cost structure consists of variable costs. Variable costs are expenses that change in proportion to the level of activity or production. As the activity level increases, variable costs also increase proportionally.

Zodiac Company's Total Costs Are Increasing in Direct Proportion to the Increases