Fixed Costs

question 85

Multiple Choice

Fixed costs:

• A) change as a small quantity of output produced changes.
• B) are constant over the short-run regardless of the quantity of output produced.
• C) are defined as the change in total costs when one more unit of output is produced.
• D) are subtracted from sales to compute the contribution margin.
• E) can be ignored in scenario analysis since they are constant over the life of a project.

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Definitions:

Tax Rate

The rate at which income is taxed for a person or a business entity.

GAAP

Generally Accepted Accounting Principles, a framework of accounting standards, principles, and procedures used in the United States.

Income Statement Information

Income Statement Information includes the revenues, expenses, and profits or losses of a company over a specified period, depicting its financial performance.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, typically a fiscal quarter or year, resulting in a net profit or loss.