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) 1
B) 2
C) 3
D) 2 and 3

Question

Quizplus · Accepted Answer

Fixed costs may change between alternatives. However, variable costs will always change between alternatives. Therefore, option 2 is true and option 3 is also true, but option 1 is not always true.

Which of the Following Is a True Statement About Cost