Which of the follow is not an assumption when estimating a cost function over the relevant range of activity?
A) Mixed costs will change in total
B) Mixed costs will change per unit
C) Variable costs will be constant in total
D) Fixed costs will be constant in total.

Question

Quizplus · Accepted Answer

The assumption that variable costs will be constant in total is incorrect when estimating a cost function over the relevant range of activity. Instead, variable costs are expected to increase or decrease in proportion to the level of activity, hence the name variable costs. Mixed costs are assumed to change in total and per unit, while fixed costs are assumed to be constant in total.

Which of the Follow Is Not an Assumption When Estimating