A variable cost is a cost that
a. varies per unit at every level of activity.
b. occurs at various times during the year.
c. varies in total in proportion to changes in the level of activity.
d. may or may not be incurred, depending on management's discretion.
An increase in the level of activity will have the following effects on unit costs for variable and fixed costs
Unit Variable Cost Unit Fixed Cost
a. Increase Decrease
b. Remains constant &nb