Which of the Following Statements Regarding Fixed Costs Is Incorrect

question 33

Multiple Choice

Which of the following statements regarding fixed costs is incorrect?

• A) Expressing fixed costs on a per unit basis usually is the best approach for decision-making.
• B) Fixed costs expressed on a per unit basis will react inversely with changes in activity.
• C) Assumptions by accountants regarding the behaviour of fixed costs rest heavily on the concept of the relevant range.
• D) Fixed costs frequently represent long-term investments in property,plant,and equipment.

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Definitions:

Lowest Cost of Goods Sold

The minimum expenses incurred in the direct creation of goods available for sale, often achieved through efficient production techniques or cost-cutting measures.

Current Cost

The cost that would be incurred to replace an asset or to purchase a service at the present time, as opposed to its historical cost.

Erratic Changes in Costs

Refers to unpredictable fluctuations in expense levels, which can impact profitability and budgeting in businesses.

Quick Assets

Assets that can be quickly converted into cash, such as marketable securities and receivables, excluding inventory.