What determines the difference between a variable and a fixed cost?
A)Whether the total cost changes when activity levels change.
B)Whether the total cost is relevant to a particular decision.
C)Whether the total cost can be traced to a specific cost object.
D)Whether the total cost is related to manufacturing or nonmanufacturing activities.

Question

Quizplus · Accepted Answer

A variable cost changes with the level of activity, while a fixed cost stays constant regardless of the level of activity. Therefore, whether the total cost changes when activity levels change is what determines the difference between a variable and a fixed cost. Choice B, C, and D are not accurate determinants of the difference between a variable and a fixed cost.

What Determines the Difference Between a Variable and a Fixed