Asked by Charlotte George on Jun 28, 2024
Verified
Which of the following is a true statement about cost behaviors in incremental analysis?
1) Fixed costs will not change between alternatives.
2) Fixed costs may change between alternatives.
3) Variable costs will always change between alternatives.
A) only 1
B) only 2
C) only 3
D) both 2 and 3
Cost Behaviors
The way in which costs change in relation to the level of activity or production volume.
Variable Costs
Costs that change in proportion to the level of activity or volume, such as materials and labor directly associated with the production.
- Apprehend the factors that affect the behavior of costs and their relevance in detailed incremental analysis.
Verified Answer
OO
Osmar OrellanaJun 30, 2024
Final Answer :
B
Explanation :
Fixed costs may change between alternatives, while variable costs will always change between alternatives. This is because fixed costs are based on overall capacity and cannot be adjusted in the short term, while variable costs are based on actual usage and can be adjusted as needed.
Learning Objectives
- Apprehend the factors that affect the behavior of costs and their relevance in detailed incremental analysis.