Which of the following statements is (are) true?
(1) The term full cost refers to the cost of manufacturing and selling a unit of product and includes both fixed and variable costs.
(2) The fixed cost per unit is considered constant despite changes in volume of activity within the relevant range.
A) Only (1) is true.
B) Only (2) is true.
C) Both of these are true.
D) None of these are true.

Question

Quizplus · Accepted Answer

The term "full cost" indeed refers to the total cost of manufacturing and selling a unit, including both fixed and variable costs. However, the fixed cost per unit is not constant; it changes with the volume of activity, as total fixed costs are spread over more units when volume increases.

Which of the Following Statements Is (Are) True