Which of the following is a true statement about cost behaviors in incremental analysis?
1) Fixed costs will not change between alternatives.
2) Fixed costs may change between alternatives.
3) Variable costs will always change between alternatives.
A) only 1
B) only 2
C) only 3
D) both 2 and 3

Question

Quizplus · Accepted Answer

Fixed costs may change between alternatives, while variable costs will always change between alternatives. This is because fixed costs are based on overall capacity and cannot be adjusted in the short term, while variable costs are based on actual usage and can be adjusted as needed.

Which of the Following Is a True Statement About Cost