COST ACCOUNTING
COST BEHAVIORS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A fixed cost
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A variable cost
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A mix cost
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A stepped fixed cost
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Detailed explanation-1: -Fixed costs are constant regardless of activity level, variable costs change proportionately with output and mixed costs are a combination of both.
Detailed explanation-2: -A variable cost is an expense that changes in proportion to production output or sales. When production or sales increase, variable costs increase; when production or sales decrease, variable costs decrease.
Detailed explanation-3: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range.
Detailed explanation-4: -Mixed cost is the total cost that combines two types of costs, i.e., fixed costs and variable costs, and therefore implies that a part of this cost doesn’t change (fixed cost) with changes in production volume. However, the other part (variable cost) changes with the volume or quantity produced.