Which of the Following Statements Is TRUE Regarding Fixed and Variable

question 132

Multiple Choice

Which of the following statements is TRUE regarding fixed and variable costs?

• A)Both costs are constant when considered on a per-unit basis.
• B)Both costs are constant when considered on a total basis.
• C)Fixed costs are fixed in total,and variable costs are fixed per unit.
• D)Variable costs are fixed in total,and fixed costs vary in total.

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Definitions:

Sensitivity Analysis

The study of how the variation in the output of a model can be attributed to different variations in the inputs of the model, used to predict the impact of changes in economic variables.

Earnings Before Taxes

The income a company generates before taking into account the income tax expense.

Sales Price

The amount a buyer pays to purchase a product or service.

Net Present Value

The current value of an investment's projected earnings, discounted at an appropriate interest rate, minus the initial capital cost.