Commercial Applications
Answer
False
Reason — Variable cost per unit remains constant irrespective of the level of production. It is the total variable cost which changes proportionately with the level of output. For example, if the level of output increases from 5,000 to 6,000 units and total variable cost rises from ₹25,000 to ₹30,000, the variable cost per unit remains unchanged at ₹5. (It is the fixed cost per unit which decreases as production increases.)
Related Questions
The term "variable costs" refers to ……………
- All costs that are likely to respond to the amount of attention devoted to them by a specific manager.
- All costs associated with marketing, shipping, warehousing, and billing activities.
- All costs that do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases.
- All manufacturing costs incurred to produce units of output.
Assertion (A): Indirect costs are always fixed costs.
Reason (R): Indirect costs are expenses that cannot be directly attributed to a specific cost object.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
Assertion (A): Indirect costs can be traced directly to a specific product or service.
Reason (R): Indirect costs are typically overheads that benefit multiple products or services.
Which of the following is correct?
- Both A and R are true, and R explains A.
- Both A and R are true, but R does not explain A.
- A is true, but R is false.
- A is false, but R is true.
Total variable cost per unit increases ……………
- When production grows
- When demand decreases
- Change in government rules
- Change in availability of raw material