When managers talk about cost behavior, they are referring to
A)where a cost is reported on the income statement.
B)the way in which total costs change in response to changes in the level of activity.
C)the method used to determine whether a cost is accrued or expensed.
D)the way cost is reported within inventory on the balance sheet.

Question

Quizplus · Accepted Answer

Cost behavior refers to the way in which total costs change in response to changes in the level of activity, such as production or sales volume. This includes determining whether costs are fixed or variable, and how they relate to changes in activity levels. Option A is incorrect as cost behavior is not related to where a cost is reported on the income statement. Option C is incorrect as the method for determining whether a cost is accrued or expensed is based on accounting principles and not cost behavior. Option D is also incorrect as cost behavior does not have any relation to how cost is reported within inventory on the balance sheet.

When Managers Talk About Cost Behavior, They Are Referring to