Which of the Following Statements Regarding Fixed Costs Is TRUE

question 113

Multiple Choice

Which of the following statements regarding fixed costs is TRUE?

• A) Fixed costs rise by a constant amount for every added unit of volume.
• B) While fixed costs are ordinarily constant with respect to volume, they can "step" upward if volume increases result in additional fixed costs.
• C) Fixed costs are those costs associated with direct labor and materials.
• D) Fixed costs equal variable costs at the break-even point.
• E) Fixed cost is the difference between selling price and variable cost.

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Definitions:

Financial Performance

An assessment of how well a business generates revenues and manages its expenses, assets, and liabilities.

Corporate Raiders

Investors who buy a large stake in a corporation with the intention of taking over its management and restructuring it for profit.

Executive Privileges

Special rights and privileges that allow presidents and other high-level officials to resist certain subpoenas and other interventions by the legislative and judicial branches of government.

Stock Price

The current price at which a share of stock can be bought or sold in the market.