Which of the Following Best Describes a Fixed Cost

question 10

Multiple Choice

Which of the following best describes a fixed cost?

• A)It may change in total when such change is unrelated to changes in production volume.
• B)It may change in total when such change is related to changes in production volume.
• C)It is constant per unit of change in production volume.
• D)It may change in total when such change depends on production volume within the relevant range.

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Definitions:

Pension Expense

The cost recognized by an employer for providing retirement benefits to employees over the current accounting period.

Expected Return

The predicted average of the probabilities of various returns an investment can generate, reflecting the anticipated earnings or loss.

Actuarially Assumed

Refers to statistical calculations and estimates made by actuaries, often related to insurance and pension fund liabilities.

Service Cost Component

The element of pension expense that represents the present value of benefits attributed by the pension plan formula to employee service during the period.