A fixed cost:
A)Requires the future outlay of cash and is relevant for future decision making.
B)Does not change with changes in the volume of activity within the relevant range.
C)Is directly traceable to a cost object.
D)Changes with changes in the volume of activity within the relevant range.
E)Is irrelevant for managers' decision making.

Question

Quizplus · Accepted Answer

A fixed cost is a cost that does not change with changes in the volume of activity within the relevant range. This cost remains constant regardless of how much of a product is produced or how many services are provided. It is relevant for future decision making since it requires the future outlay of cash, but it is not directly traceable to a cost object. It is also not irrelevant for managers' decision making as it is an important factor to consider when making decisions related to pricing, production levels, and break-even analysis.

A Fixed Cost