Step costs are fixed over only a small range of activity.Once that level of activity has been exceeded, total cost
A)increases because the excess costs become variable.
B)increases and remains constant over another small range of activity.
C)remains the same regardless of activity.
D)decreases and remains constant over another small range of activity.

Question

Quizplus · Accepted Answer

Step costs are fixed up to a certain level of activity, but once that level is exceeded, the cost increases and remains constant over another small range of activity. This is because additional resources (such as equipment or personnel) may need to be added to accommodate the higher level of activity, resulting in a higher fixed cost. Once that additional resource is in place, the cost remains constant until another threshold is reached.

Step Costs Are Fixed Over Only a Small Range of Activity.Once