Choose the correct description of variable and fixed costs. A. A variable cost is related to a
Question:
Choose the correct description of variable and fixed costs.
A.
A variable cost is related to a particular cost object and can be traced to it in an economically feasible way, such as the cost of steel in the manufacturing of a luxury car. A fixed cost is related to a particular cost object but cannot be traced to it in an economically feasible way, such as the salary of a plant manager who oversees production of many different types of luxury cars produced at the same plant.
B.
A variable cost is considered to be a unit cost, such as the per-attendee cost of hiring a musical group to perform at an event. A fixed cost is considered to be a total cost, such as the total fee paid to the musical group for performing at the event.
C.
A variable cost changes in total in proportion to changes in the related level of total activity or volume, such as a sales commission that is a percentage of each sales revenue euro. A fixed cost remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume, such as a fixed annual leasing cost of a machine.
D.
All of the above.
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham