**Question:** When the level of activity increases, total fixed costsa. decrease.b. remain the same.c. increase.d. change, but the direction depends on the specific situation.**Explanation:**This question is about how total fixed costs behave when the level of activity increases. Fixed costs, by definition, do not change with the level of activity within a relevant range; this means the correct answer is typically **b. remain the same.** Fixed costs are expenses that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.**Diagrams and Graphs:** If graphs or diagrams were present, they would likely illustrate the behavior of fixed costs relative to variable costs. For example, a fixed cost graph would display a horizontal line indicating that the total fixed costs do not change as the level of activity increases. Contrastingly, a variable cost graph would show a line that rises with the increase in activity level, reflecting that variable costs change directly with changes in the level of production or activity.

Costing: Costing is a technique used in cost accounting to determine the cost of a product. With…

Answered: When the level of activity increases,…

When the level of activity increases, total fixed costs a. decrease. b. remain the same. c. increase. d. change, but the direction depends on the specific situation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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