The component of total cost, which never changes with change in level of production is classified as _________?
Correct answer: A. fixed cost
- A. fixed cost
- B. constant
- C. variable
- D. both a and b
Explanation
A fixed cost remains unchanged in total when production volume changes within the relevant range. “Constant” describes this behavior, but fixed cost is the formal cost classification, so it is the intended answer.
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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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