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Macon Company has a variable selling cost
Macon Company has a variable selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit behave?
Total Variable Cost Variable Cost Per Unit A. Increase Increase B. Increase Remain constant C. Increase Decrease D. Remain constant Decrease E. Decrease Increase
Expert Solution
Answer
B.
Explanation
If sales Increase total variable cost will increase but since sales volume has increased, the Average variable cost will remain constant.
Since,
Average Variable Cost = Total Variable Cost/ Sales Volume
So, the correct option is B "Total Variable Cost Increase and Variable Cost per Unit Remain Constant".
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