
Concept explainers
Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.
To describe: the behavior of the total variable costs and unit variable costs with changes in the level of activity.
Explanation of Solution
The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.
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