The variable cost per unit is assumed to be constant within a particular relevant range of activity.

Question

Quizplus · Accepted Answer

This is true for most types of variable costs, such as direct materials and direct labor. However, there are some variable costs, such as shipping costs or sales commissions, that may vary disproportionately with changes in activity levels. Therefore, it is important to identify the relevant range of activity when analyzing variable costs.

The Variable Cost Per Unit Is Assumed to Be Constant