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SSC Financial and Cost Accounting P-1 QUESTION #6093
Question 1

Which of the following best describes the behavior of variable costs?

  • Total costs remain the same up to a specific level, then increase.
  • Total costs remain constant regardless of the output level.
  • Cost per unit remains constant as the level of output increases.✔️
  • Cost per unit increases as the level of output increases.
Correct Answer Explanation

Variable costs are defined as costs that vary in total directly with activity but remain constant on a per-unit basis (e.g., raw materials per unit).