When the Cost Behavior Pattern Has Been Identified as Fixed

question 31

Multiple Choice

When the cost behavior pattern has been identified as fixed at a certain volume of activity:

• A)any change in volume will probably cause the cost to change.
• B)it is appropriate to express the cost on a per unit of activity basis.
• C)the total cost will not change even if the volume of activity changes substantially.
• D)the total cost may change if the volume of activity changes substantially.

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Definitions:

Functional Currency

The currency of the primary economic environment in which the company operates.

Intercompany Transactions

Financial activities and transactions occurring between entities within the same corporate group, often requiring elimination during consolidation for accurate financial reporting.

Presentation Currency

The currency in which the financial statements are presented by the reporting entity.

Translation Difference

The difference resulting from translating the financial statements of a foreign operation into the presentation currency of the reporting entity.