Which of the following best describes a step variable-cost function?
A) a step cost function in which cost remains the same over narrow ranges of the level of activity in each relevant range
B) a step cost function in which cost remains the same over narrow ranges of the level of activity outside the relevant range
C) step cost function where the cost remains the same over wide ranges of the activity in each relevant range
D) step cost function where the cost remains the same over wide ranges of the activity outside the relevant range

Question

Quizplus · Accepted Answer

A step variable-cost function is a cost function that exhibits a step pattern but its cost remains the same over narrow ranges of the level of activity within each relevant range. This means that for a certain level of activity, the cost remains constant until a certain threshold is reached, after which the cost "jumps" to a new level. This is characterized by a step pattern in the graph of the cost function.

Which of the Following Best Describes a Step Variable-Cost Function