Describe and Explain the ff:

-Describe how total variable costs and unit variable costs behave with changes to the level of activity.
-Describe how total fixed costs and unit fixed costs behave with changes in the level of activity.
-If fixed costs increase, what would be the impact on the (a) contribution margin (b) income from operations?

Within the relevant range, total fixed costs remain constant. Regardless of the level of activity, the business pays the same. However, the fixed cost per unit changes as the level of activity changes. As more units are produced, the fixed cost per unit decreases.

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.

Fixed and variable costs are closely related to the contribution margin and the contribution margin ratio. An increase in fixed costs adds to overall cost. This would reduce how much the company earns from operations if the contribution margin is low. An increase in fixed costs adds to overall cost. So it will increase income from operations.