COST ACCOUNTING
VARIABLE COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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long run ATC rises as output increases
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long run ATC falls as output rises
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costs that do not vary with the quantity of output produced
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long run ATC stays the same as the quantity of output changes
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Detailed explanation-1: -Fixed costs, on the other hand, are any expenses that remain the same no matter how much a company produces. These costs are normally independent of a company’s specific business activities and include things like rent, property tax, insurance, and depreciation.
Detailed explanation-2: -1. Definition of Fixed Costs: costs that do not vary with the quantity of output produced.
Detailed explanation-3: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
Detailed explanation-4: -Variable costs Variable costs are costs that change with the changes in the level of production. That is, they rise as the production volume increases and decrease as the production volume decreases. If the production volume is zero, then no variable costs are incurred.