If Fixed Cost at Q = 100 Is $130, Then

question 67

Multiple Choice

If fixed cost at Q = 100 is $130, then

• A)fixed cost at Q = 0 is $0
• B)fixed cost at Q = 0 is less than $130
• C)fixed cost at Q = 200 is $260
• D)fixed cost at Q = 200 is $130
• E)it is impossible to calculate fixed costs at any other quantity

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Definitions:

Mixed Cost

A cost composed of a fixed component and a variable component that changes with the level of activity or production.

High-low Method

An approach used in cost accounting to determine the variable and fixed components of a cost by analyzing the highest and lowest levels of activity.

Utility Cost

The expense incurred for using utilities such as electricity, water, and natural gas in a business operation.

Total Cost

The sum of all costs associated with the production and delivery of a company's products or services, including both fixed and variable costs.