A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a(n):
A)Step-wise cost.
B)Fixed cost.
C)Curvilinear cost.
D)Incremental cost.
E)Flat line cost.

Question

Quizplus · Accepted Answer

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a step-wise cost. This means that the cost remains constant within a certain range of activity, but then jumps up or down when a certain threshold of activity is reached. This is different from fixed costs, which remain constant regardless of changes in activity, and curvilinear costs, which have a nonlinear relationship with activity. Incremental costs and flat line costs are not relevant to this type of cost.

A Cost with a Flat Cost Line Within a Relevant