A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n):
A) Step-wise cost.
B) Fixed cost.
C) Curvilinear cost.
D) Incremental cost.
E) Opportunity cost.

Question

Quizplus · Accepted Answer

A cost that remains constant until a certain volume is reached and then increases in steps is a step-wise cost. Fixed costs remain constant regardless of volume, curvilinear costs increase continuously with volume, incremental costs increase with each additional unit produced, and opportunity costs are the potential benefit lost by taking a certain action over an alternative.

A Cost That Remains Constant Over a Limited Range of Volume