For Short-Run Decisions, Which Costs Can Normally Be Deemed to Be

question 38

Multiple Choice

For short-run decisions, which costs can normally be deemed to be irrelevant?

• A)Variable costs.
• B)Relevant costs.
• C)Fixed costs.
• D)Total costs.

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Definitions:

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Cost-volume-profit Analysis

A financial accounting technique that calculates how variations in costs and sales volume impact a firm's profitability.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion with the level of business activity or production volume, such as raw materials and direct labor costs.