Stewart Company is attempting to classify costs according to their cost behavior. Data concerning activity and costs are listed below:
-The cost(s) that Stewart Company would classify as fixed would be:
A) insurance.
B) insurance and lubrication.
C) supplies and lubrication.
D) insurance and advertising.

Question

Stewart Company is attempting to classify costs according to their cost behavior. Data concerning activity and costs are listed below: 
-The cost(s) that Stewart Company would classify as fixed would be:
A) insurance. 
B) insurance and lubrication. 
C) supplies and lubrication. 
D) insurance and advertising.

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with changes in the level of activity or volume of goods and services produced. Insurance is a fixed cost because it remains constant regardless of the level of output or activity. The other costs listed (lubrication, supplies, and advertising) are variable costs because they increase or decrease as activity changes.

Stewart Company Is Attempting to Classify Costs According to Their