Question

Last year, Flash Company sold 15,000 units of its only product. If sales increased by 20% in the current year, how will total variable cost and total fixed cost be affected? Total Variable Cost Total Fixed Cost A) Remains constant Remains constant B) Increases Decreases C) Increases Remains constant D) Remains constant Decreases E) Remains constant Increases

Answer 1

C) Increases Remains constant

Step-by-step explanation:

As we know that

The variable cost is the cost that varies when the level of output changes while the fixed cost is the cost that remains unchanged whether or not the level of output changes

So in the given case, the sales are increased by 20% that results in an increment of variable cost and the fixed cost would remain the same