Part 1: With a step fixed-cost function ________.

A) fixed cost changes proportionally with the level of activity

B) the cost varies with the changes in the activity

C) fixed cost is often approximated with a continuous variable-cost function

D) the cost remains the same over wide ranges of the activity in each relevant range

Part 2: The ideal database for estimating cost functions contains ________.

A) only the independent variable and not the dependent variable

B) numerous cost driver observations

C) cost driver observations spanning a narrow range

D) a few values of the cost driver that are grouped closely together