The True Statement About Cost Behavior Is That

question 100

Multiple Choice

The true statement about cost behavior is that:

• A) variable costs are constant on a per-unit basis and change in total as activity changes.
• B) fixed costs are constant on a per-unit basis and change in total as activity changes.
• C) fixed costs are constant on a per-unit basis and constant in total as activity changes.
• D) variable costs change on a per-unit basis and change in total as activity changes.
• E) variable costs are constant on a per-unit basis and are constant in total as activity changes.

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Definitions:

Incremental Net Income

The additional net income that results from a specific business decision compared to an alternative.

Working Capital

Current assets minus current liabilities, indicating the liquidity available for a company's day-to-day operations.

Taxable Income

The portion of income subject to taxation by governmental authorities after accounting for deductions and exemptions.

Working Capital

Working capital refers to the difference between a company's current assets and current liabilities, indicating the liquidity and short-term financial health of the business.