Which of the following statements regarding fixed costs is true? A) Fixed costs rise by a constant amount for every added unit of volume. B) While fixed costs are ordinarily constant with respect to volume, they can "step" upward if volume increases result in additional fixed costs. C) Fixed costs are those costs associated with direct labor and materials. D) Fixed costs equal variable costs at the break-even point. E) Fixed cost is the difference between selling price and variable cost.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not change with fluctuations in the level of production or sales volume. However, in some cases, an increase in volume may require new or additional fixed costs, such as the purchase of new equipment or the hiring of additional personnel. This is known as a "step cost" or a "semi-variable cost." The other statements are incorrect.

Which of the Following Statements Regarding Fixed Costs Is true