In step cost functions, the cost is increased by ____________?
Correct answer: A. discrete amounts
- A. discrete amounts
- B. same amounts
- C. linear amounts
- D. nonlinear amounts
Explanation
A step cost stays constant over a relevant activity range and then rises in discrete amounts when the activity crosses a capacity threshold. It does not increase smoothly like a linear cost.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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