A Cost Is a Fixed Cost If It Only Changes

question 19

True/False

A cost is a fixed cost if it only changes in relation to total sales revenue.

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Definitions:

Least-squares Regression

A statistical method used to determine the line of best fit by minimizing the squared differences between observed values and those predicted by a linear function.

Mixed Cost

Expenses that have both fixed and variable components, varying with the level of activity but not in direct proportion.

High-low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Fixed Manufacturing Cost

Costs that do not change with the level of production, such as rent, salaries, and insurance.