Question

Describe how total variable costs and unit variable costs behave with change in the level of activity.

Answer 1

Total variable costs fluctuate in direct proportion to variations in activity levels. No matter the level of activity, unit variable costs are constant.

What is the difference between Total variable cost and Unit Variable Cost?

The sum of all variable expenses related to the cost of products sold within a reporting period is known as the total variable cost. Analyzing the profitability of corporations is a crucial element. Only costs that change in response to production or sales volume are included in the total variable cost.

The cost of each unit of goods that a firm produces is referred to as variable cost per unit. Variable costs alter as changes take place in the company's level of production or activity. Changes in the business have an impact on the unit variable cost; as more units of a good are produced, additional costs are spent.

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