STATEMENT	True	False	I dont know	Points
1. When costs are divided according to their behaviour in response to changes in a level of business activity, we distinguish between fixed and variable costs.	X
2. Marginal cost is defined as a ratio between the total cost and the level of production. If the level of production increases proportionally, marginal cost increases proportionally, too.
3. A direct cost is a cost that can be individually traced to an exactly known cost object. A direct cost can be either fixed or variable. If, for example, a machine is used only for manufacturing of one particular product, the depreciation of the machine (under the assumption of linear method) is considered as a direct fixed cost.	X
4. In the case of progressive variable cost, the average variable cost increases over a period of time. The average total cost in such a situation also increases and it increases even faster than the average variable cost.
5. When we say a cost is fixed, we mean it is fixed within some relevant range which is defined with a given capacity. If a firm wants to increase the level of activity over the given capacity the fixed costs is increased due to the necessary investment.
6. A sunk cost is the potential benefit that is given up when one alternative is selected over another. An opportunity cost is a cost that has already been incurred and cannot be changed by any decision now or in the future.		X