The classification of costs as variable and fixed depends on the relevant range, the length of the time horizon, and the specific decision situation.

Question

Quizplus · Accepted Answer

The classification of costs as variable and fixed can vary depending on the relevant range (the range of activity or production over which the cost behavior is assumed to be stable), the time horizon (short-term or long-term), and the specific decision situation (e.g. whether the decision relates to pricing, production, or financing). Therefore, the statement is true.

The Classification of Costs as Variable and Fixed Depends on the Relevant