Variable costs increase as the number of clients increases.

Variable costs increase as the number of clients increases.

• A. Irrelevant
• B. Cannot be determined
• C. False
• D. True

Answer: (D)

Variable costs vary in total with the level of activity. When more clients are served, more resources are used—such as consumables, direct labor, and processing costs—so the total variable cost increases. The cost per client stays the same, but as activity grows, the aggregate amount spent on those variable items rises proportionally. For example, if each client incurs a certain amount of variable cost, doubling the number of clients roughly doubles the total variable cost within the relevant range. That’s why the statement is true. The other options don’t fit because the relationship is well-defined (not irrelevant), determinable from the cost behavior model, and not false.

Variable costs vary in total with the level of activity. When more clients are served, more resources are used—such as consumables, direct labor, and processing costs—so the total variable cost increases. The cost per client stays the same, but as activity grows, the aggregate amount spent on those variable items rises proportionally. For example, if each client incurs a certain amount of variable cost, doubling the number of clients roughly doubles the total variable cost within the relevant range. That’s why the statement is true. The other options don’t fit because the relationship is well-defined (not irrelevant), determinable from the cost behavior model, and not false.