Classifying costs by behavior with changes in volume of activity involves:
A)Identifying fixed costs and variable cost.
B)Identifying cost of goods sold and operating costs.
C)Identifying costs as financial or managerial.
D)Identifying costs in a physical manner.
E)Identifying both quantitative and qualitative cost factors.

Question

Quizplus · Accepted Answer

Classifying costs by behavior with changes in volume of activity involves identifying fixed costs (costs that do not change with changes in volume of activity) and variable costs (costs that do change with changes in volume of activity). This is the most common method of cost classification and is essential in determining a company's breakeven point and analyzing the impact of changes in level of activity on costs. The other choices do not accurately describe the process of classifying costs by behavior with changes in volume of activity.

Classifying Costs by Behavior with Changes in Volume of Activity