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Question
Total variable cost per unit increases ______.
Options
When production grows
When demand decreases
Change in government rules
Change in availability of raw material
Solution
Total variable cost per unit increases when production grows.
Explanation:
Cost behaviour determines whether the final cost is fixed, variable, or mixed. Each cost responds differently to variations in manufacturing activity. When total costs must be split, we can apply the high-low technique based on cost behaviour.
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