The Level of Activity Within Which Fixed Costs Remain Unchanged

question 55

Multiple Choice

The level of activity within which fixed costs remain unchanged is called the:

• A) extreme range.
• B) relevant range.
• C) activity range.
• D) relevant range AND activity range.

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Definitions:

Net Operating Income

The profit a company makes from its core business operations, excluding deductions of interest and taxes.

Net Cash Flow

The amount of cash generated or lost over a specific period, taking into account cash inflows and outflows from operational, investing, and financing activities.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production, such as factory rent or salaries of production supervisors.

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed overhead costs.