Porterhouse Company has both fixed and variable production costs. If volume goes up by 20%, how would that affect the total variable costs? (Assume all volumes are within the relevant range.)

Question

Quizplus · Accepted Answer

Variable costs are directly proportional to the volume of production. If the volume goes up by 20%, variable costs would also increase by the same percentage, i.e., 20%.

Porterhouse Company Has Both Fixed and Variable Production Costs