Which Type of Cost Has an Unchanging Total Expense and a Decreasing

question 10

Multiple Choice

Which type of cost has an unchanging total expense and a decreasing average expense as output increases?

• A) Fixed cost
• B) Variable cost
• C) Step cost
• D) Variable cost with fixed component

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's profits and losses.

Dividends Received

Payments shareholders receive from a company’s earnings, typically distributed in cash or additional stocks.

Investment Revenue

Investment revenue is income generated from various types of investments, including dividends from stocks, interest on bonds, or income from rental properties.

Equity Method

The equity method is an accounting technique used to record investments in other companies, typically reflecting the owning company's fair share of the investee's net income.