Question: 1. Identify some factors that might cause variable costs per unit to change if the actual level of activity in a given month falls above or below the relevant range. (You may select more than one answer)
a. Direct material costs per unit could decrease if quantity discounts are received from the manufacturer for larger order quantities.
b. Direct material costs could increase if quantity discounts currently being received are lost if order quantities decrease significantly.
c. Direct labour costs per unit could increase if activity levels increase and installations have to be completed using more expensive overtime hours.
d. Direct labour costs per unit could increase if activity levels decrease and less experienced, and lower paid, installers are laid off.
e. Direct labour costs per unit could decrease as the number of installations increases due to the effects of learning (i.e., the time required for each installation may decrease with experience).
f. Direct material costs per unit could increase if quantity discounts are received from the manufacturer for larger order quantities.
g. Direct material costs could decrease if quantity discounts currently being received are lost if order quantities decrease significantly.