A direct cost can be:
A)Only fixed.
B)Only variable (unit-level).
C)Either fixed or variable (unit-level).
D)Neither fixed nor variable (unit-level).

Question

Quizplus · Accepted Answer

A direct cost can be either fixed or variable (unit-level), depending on the activity level or volume of production. Fixed costs remain constant regardless of the activity level, whereas variable costs change in proportion to the level of output. Therefore, option A is incorrect because direct costs can also be variable. Option B is incorrect because direct costs can also be fixed. Option D is incorrect because direct costs are always either fixed or variable (unit-level).

A Direct Cost Can Be