A fixed cost:
A)Requires the future outlay of cash and is relevant for future decision making.
B)Does not change with changes in the volume of activity within the relevant range.
C)Is directly traceable to a cost object.
D)Changes with changes in the volume of activity within the relevant range.
E)Is irrelevant for cost-volume-profit and short-term decision making.

Question

Quizplus · Accepted Answer

A fixed cost is a cost that does not change with changes in the volume of activity within the relevant range. It is incurred regardless of the level of activity and is therefore not relevant for cost-volume-profit and short-term decision making. However, it requires the future outlay of cash and is relevant for future decision making. It is also directly traceable to a cost object, such as a product or department.

A Fixed Cost