The following data have been collected for four different cost items. Which of the following classifications of these cost items by cost behavior is correct?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

The following data have been collected for four different cost items.  Which of the following classifications of these cost items by cost behavior is correct?

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D

Quizplus · Accepted Answer

The cost items for advertising and insurance increase with an increase in sales volume, indicating a variable cost behavior. The cost for rent remains constant regardless of sales volume, indicating a fixed cost behavior. The cost for salaries is likely a mixed cost, with a fixed component for base salaries and a variable component for bonuses or commissions. Therefore, choice B correctly classifies these cost items by cost behavior.

The Following Data Have Been Collected for Four Different Cost