BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Proportional costs ____
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Are directly proportional to the volume of production
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Rise less than proportional to production increase
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Increase more than proportional to production increase
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Do not change in relationship to production
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Explanation:
Detailed explanation-1: -Variable costs are directly proportional to the level of production.
Detailed explanation-2: -Variable costs change in proportion to the quantity of output. As production quantity increases, the cost increases; as production quantity decreases, so do the costs. Most accounting textbooks depict variable costs as varying directly with volume.
Detailed explanation-3: -Proportional costs are those costs that are directly pro-portional to the volume of production. The cost function of proportional costs is given by a line which goes through the origin.
Detailed explanation-4: -The cost of production is directly proportional to the number of units produced.
There is 1 question to complete.