Fixed and variable costs:
A)always change in the same proportion.
B)are defined as variable or fixed for a specific activity for a given time period.
C)are only defined for a specific activity and never for a given period of time.
D)are only defined for a given period of time and not for a specific activity.
E)are never useful to managers when they make cost decisions.

Question

Quizplus · Accepted Answer

Fixed and variable costs are defined as such for a specific activity and for a given time period. It is important for managers to distinguish between fixed and variable costs in order to make informed cost decisions. Therefore, option B is the correct answer. Options A, C, D, and E are incorrect because they either make inaccurate statements or are too broad or too narrow in their scope.

Fixed and Variable Costs