Fixed Costs That Change for Activity Outside the Relevant Range

question 111

Multiple Choice

Fixed costs that change for activity outside the relevant range would include

• A) supervision costs.
• B) electricity costs.
• C) production supplies costs.
• D) raw materials costs.

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in response to changes in production or sales volumes.

Billing Expense

Costs incurred during the billing process, including materials, postage, and labor costs related to preparing and sending out invoices to customers.

Contribution Format

A layout of the income statement that distinguishes between fixed and variable expenses to emphasize the contribution margin.

High-low Method

A technique in accounting used to estimate variable and fixed cost components of a cost by analyzing the highest and lowest activity levels.