A Cost That Remains the Same in Total Even When

question 6

Multiple Choice

A cost that remains the same in total even when volume of activity varies is a:

• A) Fixed cost.
• B) Curvilinear cost.
• C) Variable cost.
• D) Step-wise variable cost.
• E) Standard cost.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed versus variable costs a company has.

Variable Costs

Expenses that change in proportion to the level of production or sales activity.

Composite Units

A measure used in accounting to bundle goods or services together for the purposes of inventory management, costing, or sales analysis.

Fixed Costs

Costs that remain constant regardless of a business's operational levels, like lease payments, wages, and coverage fees.