ECONOMICS

Detailed explanation-1: -Answer and Explanation: If a firm increases its activity level d) some costs will change, others will remain the same. Costs that change with activity are known as variable costs, such as costs of raw materials or direct labor. Costs that remain the same are known as fixed costs, such as rent or utility payments.

Detailed explanation-2: -As the level of activity increases, the total cost increases by the same proportion. Conversely, as the level of activity decreases, the total cost decreases by the same proportion.

Detailed explanation-3: -Presentation Outline. Although variable cost per unit remain constant, total variable cost increases and decreases in proportion to changes in the activity level.

Detailed explanation-4: -Variable costs Some costs, such as the cost of direct material, vary with the level of activity and are known as variable costs. These costs tend to vary directly with variations in the level of activity and change every time small changes in activity occur.

Detailed explanation-5: -Fixed costs are costs that remain the same per unit regardless of changes in the activity level.