How Are Fixed Costs Best Defined

question 35

Multiple Choice

How are fixed costs best defined?

• A)as fixed in relation to changes in activity over the relevant range of output.
• B)as fixed for all time.
• C)as fixed for 6 months.
• D)as fixed for a given number of products.

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Definitions:

Net Present Values

A method used in capital budgeting to analyze the profitability of an investment or project by calculating the present values of all cash inflows and outflows.

Useful Life

The estimated duration of time an asset is expected to be usable for its intended purpose.

Residual Value

The estimated value that an asset will have at the end of its useful life, after it has been depreciated.

Present Value

The current value of future monetary amounts or sequences of cash inflows, factoring in a specific rate of interest.