Asked by Sheryl Kambuni on Jun 03, 2024
Verified
Which of the following statements is true when referring to fixed costs?
A) Committed fixed costs arise from the annual decisions by management.
B) As volume increases, unit fixed cost and total fixed cost will change.
C) Fixed costs increase in total throughout the relevant range.
D) Discretionary fixed costs can often be reduced to zero for short periods of time without seriously impairing the long-run goals of the company.
Discretionary Fixed Costs
Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.
Committed Fixed Costs
Long-term fixed costs that cannot be easily altered in the short term, such as lease payments or insurance contracts.
Volume
The quantity or amount of something, often used in context with production, sales, or trading activities.
- Determine the influence of cost behavior on decision-making and financial outcomes.
Verified Answer
Learning Objectives
- Determine the influence of cost behavior on decision-making and financial outcomes.
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