Accounting Principles 2, Test#2,apoers 20, 21 & 22 39. An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost Unit Fixed Cos a. Increases b. Remains constantRemains constant c. Decreases Decreases Remains constant d. Remains constantDecreases 40. The increased use of automation and less use of the work force in companies has caused a trend towards an increase in A) both variable and fixed costs. B) fixed costs and a decrease in variable costs. C) variable costs and a decrease in fixed costs. D) variable costs and no change in fixed costs. 41. If a firm increases its activity level, A) costs should remain the same. B) most costs will rise. C) no costs will remain the same D) some costs will change, others will remain the same. 42. Which of the following costs are variable? Cost 10,000 Units 30.000 Units 1. 2. 3. $100,000 40,000 90,000 50,000 S300,000 240,000 90,000 150,000 A) 1 and 2 B) 1 and 4 C) only I D) only 2 43. Why is identification of a relevant range important? It is required under GAAP Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. A) B) C) It directly impacts the number of units of product a customer buys. D) It is a cost that is incurred by a company that must be accounted for Page 7