How does activity-based management treats fixed costs?
A)As costs which vary directly with volume.
B)As costs which cannot be controlled over the long-run.
C)As costs which may vary for reasons other than volume.
D)As sunk costs which have no future economic benefit.

Question

Quizplus · Accepted Answer

Activity-based management recognizes that fixed costs may vary for reasons other than volume, such as changes in technology or changes in economic conditions. Therefore, fixed costs are not treated as costs that vary directly with volume or which cannot be controlled. Additionally, fixed costs are not considered sunk costs, as they may still provide future economic benefits.

How Does Activity-Based Management Treats Fixed Costs