Question

Which of the following statements is true of the behavior of total variable​ costs, within the relevant​ range? A. They will increase as production decreases. B. They will decrease as production decreases. C. They will remain the same as production levels change. D. They will decrease as production increases.

Answer 1

Answer:

They will decrease as production decreases

Explanation:

Total Variable cost is sum of all the cost incurred in production of total units of goods produced. It is directly proportional to the number of units of goods produced. It helps to analyze cost structure of goods and then decide on pricing strategy of the goods. Some of the examples of variable cost can be packaging cost, raw material’s cost.

Mathematically it can be defined as  

Total variable cost = Total units of goods produced *  variable cost for one unit of good produced  

Hence from the given option  They will decrease as production decreases as the number of units of goods produced will decrease and hence lesser raw material and packaging will be required to produce the goods.