Question
If actual production of units are lower than the budgeted level of production, which of the following costs would be lower than the budgeted costs?
The correct answer is
Total variable cost
Within the relevant range and at an unchanged variable cost per unit, \(\text{Total variable cost}=\text{Units produced}\times\text{Variable cost per unit}\). Lower output therefore reduces total variable cost. The variable cost per unit and total fixed cost remain unchanged.
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