Classifying costs by behavior with changes in volume of activity involves:
A)Identifying fixed cost and variable cost.
B)Identifying cost of goods sold and operating costs.
C)Identifying costs as financial or managerial.
D)Identifying costs in a physical manner.
E)Identifying both quantitative and qualitative cost factors.

Question

Quizplus · Accepted Answer

Classifying costs by behavior with changes in volume of activity involves identifying fixed costs that do not change with changes in activity level and variable costs that change proportionally with changes in activity level. This distinction is important for cost-volume-profit analysis and budgeting.

Classifying Costs by Behavior with Changes in Volume of Activity