The Assumption of Cost Function Linearity Means: I Fixed Costs

question 22

Multiple Choice

The assumption of cost function linearity means: I Fixed costs remain fixed.
II Sales mix remains constant.
III The fixed cost per unit remains constant.

• A) I only
• B) I and II only
• C) I, II, and III
• D) III only

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Definitions:

Operating Policies

Guidelines, rules, and procedures established by an organization to govern its operations and decision-making processes.

Asset Revaluation Reserve

An equity account that records increases in the carrying amount of a company's assets, reflecting changes in value over time.

General Reserve

A reserve fund set aside out of profits for the purpose of strengthening the company's financial position and fulfilling future needs or contingencies.