In cost-volume-profit analysis, all costs are classified into the following two categories:
A) mixed costs and variable costs
B) sunk costs and fixed costs
C) discretionary costs and sunk costs
D) variable costs and fixed costs

Question

Quizplus · Accepted Answer

In cost-volume-profit analysis, costs are classified into two categories: variable costs, which change in proportion to changes in activity volume, and fixed costs, which remain constant regardless of changes in activity volume. Mixed costs, discretionary costs, and sunk costs are not included in these categories as they behave differently in relation to changes in activity volume.

In Cost-Volume-Profit Analysis, All Costs Are Classified into the Following