Chapter 21, Problem 21DQ

To determine

Variable cost is the cost that remains constant per unit. It increases at similar rate per unit with the increase in volume level. Variable cost changes in direct proportion to the change in the production level or sales volume.

Fixed cost is the cost which remains constant in totality. Fixed cost does not fluctuate with the change in production volume.

In the given question, Samsung Company is planning to expanding sales of its most popular smartphone model by 65%. We have to determine whether the variable and fixed costs for this will be within the relevant range if the company is planning to expand its sales.