Costs that do not change with changes in activity levels are known as:
A)fixed costs.
B)variable costs.
C)sunk costs.
D)opportunity costs.

Question

Quizplus · Accepted Answer

Fixed costs are costs that do not vary with changes in activity levels, such as rent or salaries. Variable costs, on the other hand, do vary with changes in activity levels. Sunk costs are costs that have already been incurred and cannot be recovered. Opportunity costs are the costs of foregone alternatives, such as the cost of choosing to invest in one project over another.

Costs That Do Not Change with Changes in Activity Levels