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

Question

Quizplus · Accepted Answer

Since Porterhouse Company has both fixed and variable production costs, the total costs would not increase by the same percentage as the increase in volume. The variable costs would increase with the increase in volume, but the fixed costs would remain unchanged. Therefore, the total costs would go up by some amount less than 20%.

Porterhouse Company Has Both Fixed and Variable Production Costs