Which of the following is true regarding Fixed Costs?Group of answer choicesRemain constant as activity level increasesIncrease at a faster rate as activity level decreasesGo up as activity level increasesInversely vary with activity level
Question
Which of the following is true regarding Fixed Costs?Group of answer choicesRemain constant as activity level increasesIncrease at a faster rate as activity level decreasesGo up as activity level increasesInversely vary with activity level
Solution
The correct answer is: Remain constant as activity level increases.
Fixed costs are costs that do not change with the level of output or activity. Therefore, they remain constant whether the activity level increases or decreases. Examples of fixed costs include rent, salaries, and insurance. These costs have to be paid regardless of the level of production or sales.
Similar Questions
If the activity level decreases by 25% then total variable costs willGroup of answer choicesDecrease by 25%Increase by 25%Increase by more than 25%Remain the same
Total variable costs• a. increase with a decrease in activity.O b. are constant regardless of changes in activity.• c. have no relevant range.• d. change proportionately with changes in activity levels.
Which of the following costs remains constant within a relevant range of activity?Group of answer choicesvariable costsmixed costsfixed costsproduction costs
As output increases, fixed cost per unit:Group of answer choicesremains constant.increases.equals to fixed costs.decreases.
28.Average fixed cost: A. Increases as output increases B. Remains the same whatever the level of output C. Diminishes as output increases D. Diminishes as output diminishes
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.