Question

Which of the following statements is true? 1) If activity is higher than expected, total variable costs should be higher than expected AND If activity is lower than expected, total fixed costs should be lower than expected. 2. In a flexible budget, when the activity declines, the unit variable cost also declines. A) Only statement I is true. B) Only statement II is true. C) Both statements are true. D) Neither statement is true.

Name: which of the following statements is true 1 if activity is higher than expected total variable costs should be higher than expected and if activity is lower than expected total fixed costs s 78704
Uploaded: 2023-12-17T20:39:25-08:00
Duration: 2 min 20 s
Channel: Akash M
Description: which of the following statements is true 1 if activity is higher than expected total variable costs should be higher than expected and if activity is lower than expected total fixed costs s 78704

          Which of the following statements is true?
1) If activity is higher than expected, total variable costs should be higher than expected AND If activity is lower than expected, total fixed costs should be lower than expected.
2. In a flexible budget, when the activity declines, the unit variable cost also declines.
A) Only statement I is true.
B) Only statement II is true.
C) Both statements are true.
D) Neither statement is true.

Added by Stanley W.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

12/17/2023

Step 1

The first part of this statement is correct because variable costs are directly proportional to the level of activity. If activity increases, variable costs will also increase. However, the second part of the statement is incorrect because fixed costs do not Show more…

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Which of the following statements is true? 1) If activity is higher than expected, total variable costs should be higher than expected AND If activity is lower than expected, total fixed costs should be lower than expected. 2. In a flexible budget, when the activity declines, the unit variable cost also declines. A) Only statement I is true. B) Only statement II is true. C) Both statements are true. D) Neither statement is true.