Cost Behaviour Can Be Graphed with a Straight Line When

question 56

True/False

Cost behaviour can be graphed with a straight line when a cost changes proportionately with changes in a cost driver.

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Definitions:

Fixed Costs

Overheads like rent, salaries, and insurance that stay the same, irrespective of how much is produced or sold.

Break-Even

The point at which total costs equal total revenues, resulting in no net loss or gain for a business.

Variable Cost

Costs that vary directly with the level of production or volume of output.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing a basis for operational planning.