1C1A LAR COMPANY HAS FOUND THAT ITS TOTAL ELECTRICITY COST HAS BOTH A...

157. CSO: 1C1a LOS: 1C1a

Lar Company has found that its total electricity cost has both a fixed component and a

variable component within the relevant range. The variable component seems to vary

directly with the number of units produced. Which one of the following statements

concerning Lar’s electricity cost is incorrect?

a. The total electricity cost will increase as production volume increases.

b. The total electricity cost per unit of production will increase as production volume

increases.

c. The variable electricity cost per unit of production will remain constant as

production volume increases.

d. The fixed electricity cost per unit of production will decline as production volume