Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?
A) Mixed costs will change in total
B) Variable cost per unit will be constant
C) Variable costs will be constant in total
D) Fixed costs will be constant in total.

Question

Quizplus · Accepted Answer

C) Variable costs will change in total as activity levels change, but they are assumed to remain constant per unit, not constant in total. Mixed costs contain both variable and fixed cost elements, hence they change in total as activity levels change. Fixed costs are assumed to remain constant in total over the relevant range.

Which of the Follow Is Not an Assumption When Estimating