Which of the following statements is true of the behavior of total fixed costs,

Question

Which of the following statements is true of the behavior of total fixed costs, within the relevant range? They will remain the same as production levels change. They will increase as production decreases They will decrease as production decreases. They will decrease as production increases. Assume that Anna's cellphone service provider charges $6 per month and $0.4 per minute per call. If Anna's current bill is $80, how many calling minutes did Anna use? 220 minutes 200 minutes 185 minutes 170 minutes Miranda was reviewing the water bill for her dog day care and spa and determined that higher bill, $5,000, occurred in July when she washed 500 dogs and her lowest bill, $3,600. occurred February when she washed 325 dogs. What was the variable cost per dog associated with Miranda's water bill $7.20 $11.8 $10.00 $8.00

Explanation / Answer

2./

WITHIN THE RELEVENT RANE THE TOTAL FIXED COST REMAIN SAME AS THE PRODUCTION LEVEL CHANGES. BECAUSE FIXED COST WILL REMAIN CONSTANT IRESPECTIVE OF LEVEL OF PRODUCTION UPTO TO A CERTAIN RANGE.

ANSWER OPTION A

3./

TOTAL CURRENT CELLPHONE BILL = FIXED COST + VARIABLE COST

$80 = $6 + (MINUTES * $0.4)

MINUTES = 185 MINUTES

ANSWER OPTION C

4./

VARIABLE COST PER DOG

= CHANGE IN TOTAL COST / CHANGE IN TOTAL DOG WASH

= ($5000 - $3600) / (500 - 325)

= $1400 / 175

= $8 PER DOG

ANSWER OPTION D

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