Which of the Following Statements About Step Costs Is FALSE

question 95

Multiple Choice

Which of the following statements about step costs is FALSE?

• A)If the individual chunks of cost are relatively large and apply to a specific,broad range of activity,the step cost is considered to be a fixed cost over that range of activity.
• B)When individual chunks of cost are relatively small and apply to a narrow range of activity,step costs are considered to be variable costs.
• C)Some step costs can be assumed to be variable costs for planning purposes with little loss of accuracy.
• D)Step costs are the same as mixed costs.

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Definitions:

Working Capital Decision

The process of managing the short-term assets and liabilities of a firm to ensure it operates efficiently and can meet its obligations.

Capital Expenditure

Funds spent by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Working Capital Management

Planning and managing the firm’s current assets and liabilities.

Inventory

Raw materials, work-in-progress, and finished goods that are considered assets and intended for sale in the ordinary course of business.