A(n) _____ cost is a cost whose total amount changes in direct proportion to a change in volume.
variable |
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fixed |
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mixed |
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relevant |
A variable cost is a cost whose total amount changes in direct proportion to a change in volume.
First option is the correct option.
Total variable cost changes in direct proportion to output i.e. with the increase in output, it increases and with the decrease in output, it decrease in the same proportion.
Total fixed cost does not change with in the relevant range of output.
A mixed cost is a cost which consist of both variable and fixed portion of cost.
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