Which of the following assumptions are typically made when estimating costs?
A)Costs are nonlinear and costs estimated for a specific level of activity are within the relevant range.
B)Costs are linear and costs estimated for a specific level of activity are within the relevant range.
C)Costs are nonlinear and total costs never exceed fixed costs.
D)Costs are linear and total costs never exceed variable costs.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

It is typically assumed that costs are linear and costs estimated for a specific level of activity are within the relevant range. This means that as the level of activity increases or decreases, costs change proportionally. Additionally, costs estimated within the relevant range - the range of activity levels for which the cost assumptions hold true - are considered reliable for decision-making purposes.

Which of the Following Assumptions Are Typically Made When Estimating