Asked by Esmeralda Pimentel on Jun 13, 2024
Verified
Which of the following statements regarding fixed costs is incorrect
A) Fixed costs expressed on a per unit basis will react inversely with changes in activity.
B) Expressing fixed costs on a per unit basis usually is the best approach for decision-making.
C) Assumptions by accountants regarding the behaviour of fixed costs rest heavily on the concept of the relevant range.
D) Fixed costs frequently represent long-term investments in property, plant, and equipment.
Fixed Costs
Expenses that do not change in total with changes in the level of production or sales, such as rent, salaries, and insurance.
Relevant Range
The range of activity within which the assumptions about variable and fixed cost behaviors remain valid.
Per Unit Basis
A method of calculating financial figures or metrics for each individual unit of production or sale.
- Distinguish among diverse categories of expenses (fixed, variable, manufacturing, and period costs) and their significance in accounting and making decisions.
Verified Answer
Learning Objectives
- Distinguish among diverse categories of expenses (fixed, variable, manufacturing, and period costs) and their significance in accounting and making decisions.
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