Which One of the Following Sentences About Step Costs Is

question 14

Multiple Choice

Which one of the following sentences about step costs is true?

• A)Step costs increase with each additional unit produced.
• B)Step costs have no relation to number of units produced.
• C)Step costs are constant within certain ranges of activity but differ outside those ranges of activity.
• D)Step costs are variable within narrowly defined ranges of activity, but constant over wider ranges of activity.

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Definitions:

Average Cost Method

An inventory costing method that calculates the cost of goods sold based on the average cost of all similar items in inventory.

Equivalent Unit

A measure used in cost accounting to express the amount of work done by manufacturers on units that are partially completed at the end of an accounting period.

Applied Overhead

The portion of overhead costs allocated to specific jobs or departments based on a predetermined rate.

Department 2

A designated segment within an organization, often used in context to differentiate varying functional areas or operational units.