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A fixed cost is fixed only in relation to


Question

A fixed cost is fixed only in relation to

Options

A) the quality of goods produced

B) the quantity of goods sold

C) a given period of time and a range of activities

D) a given period of time and the nature of activity

The correct answer is D.

Explanation:

In management accounting, fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales. In marketing, it is necessary to know how costs divide between variable and fixed.


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  • In management accounting, fixed costs are defined as expenses that do not change as a function of the activity of a business, within the relevant period. For example, a retailer must pay rent and utility bills irrespective of sales. In marketing, it is necessary to know how costs divide between variable and fixed.

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