Which of the following statements is true?
A)In real life, the curvilinear nature of variable costs is questionable.
B)In real life, fixed costs are fixed in total and do not change at various activity levels.
C)Within the relevant range, there is rarely a straight-line relationship for both variable and fixed costs.
D)Within the relevant range the linear assumption is valid and useful for cost behaviour analysis.

Question

Quizplus · Accepted Answer

Within the relevant range, there is rarely a straight-line relationship for both variable and fixed costs. This means that the linear assumption is often not valid and more complex cost behavior models may be necessary. Option A is incorrect as the curvilinear nature of variable costs is often observed in real life situations. Option B is incorrect as fixed costs may change at different activity levels due to factors such as changes in capacity or technology. Option D is incorrect as the linear assumption may not be valid in all situations.

Which of the Following Statements Is True