Asked by Manuel Antonio on Jul 02, 2024
A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.
Fixed Cost
Costs that do not change with the level of production or output, remaining constant even as volume changes.
Relevant Range
The range of activity within which the assumptions about fixed and variable costs are valid. Beyond this range, cost behaviors may change.
Per Unit Basis
A method of cost allocation or measurement that divides a total by the number of units to find the cost per unit.
- Determine the nature of cost fluctuations regarding variable and fixed expenses and analyze how variations in the level of activity affect these costs.
Learning Objectives
- Determine the nature of cost fluctuations regarding variable and fixed expenses and analyze how variations in the level of activity affect these costs.