Question

Last month, the Alexia Company experienced a sharp increase in its activity level; however, the company’s total fixed cost did not change. You have been asked to determine what cost changes the company can expect as a result of the change in activity level. What will you report?

Answer 1

Answer:

If Alexia Company increases its activity this will result in a Variable Cost increases and Variable Overhead increase.

Explanation:

If we own a company, and that company expend an amount of certain resources or money in a certain operation. This will cost a defined amount of hours, money to operate and get results. If we increase our activity level or production this action will increase the variable costs involved.