Which cost behavior is most accurately described as fixed within a relevant range of activity?
Correct answer: B. Total cost remains unchanged in total
- A. Total cost remains unchanged per unit
- B. Total cost remains unchanged in total
- C. Total cost increases in direct proportion
- D. Total cost decreases when output increases
Explanation
A fixed cost remains constant in total over a relevant activity range, although its cost per unit falls as output rises. Variable cost, in contrast, usually remains constant per unit.
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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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