ECONOMICS

Detailed explanation-1: -Within the relevant range, variable costs can be expected to: A) vary in total in direct proportion to changes in the activity level. B) remain constant in total as the activity level changes. C) increase on a per unit basis as the activity level increases.

Detailed explanation-2: -Within the relevant range, the variable cost per unit is constant for all levels of production but varies in total based on the output produced. As the number of units increases, the total variable cost increases. Within the relevant range, the total fixed cost remains constant.

Detailed explanation-3: -Answer and Explanation: It is false that, within the relevant range a change in activity results in a change in variable cost per unit and total fixed costs. Within the relevant range, fixed costs do not change as volume increases or decreases.

Detailed explanation-4: -It is important for managers to understand the behavior of each type of cost. 1. Variable Costs. A variable cost is one whose total dollar amount varies in direct proportion to changes in the activity level.

Detailed explanation-5: -The relevant range is the range over which cost behavior assumptions are valid. Although total variable cost increases when activity increases, the rate is only constant within the relevant range. Total fixed cost can behave in a step-cost manner when outside the relevant range..