A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a (n) : incremental cost. curvilinear cost. flat line cost. step-wise cost. fixed cost.

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Silva

Business

13 December, 00:00

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a (n) : incremental cost. curvilinear cost. flat line cost. step-wise cost. fixed cost.

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Alexandria Ferguson · Answer 1

step-wise fixed cost

Explanation:

A step cost is a cost that remain the same with a range of activities but has the tendency to rise significantly when activity exceeds the normal range.

For example, For a school that pays $10,000 as rent for a classroom of 20-seater capacity, the rent would be fixed as long as the number of students is within 1 to 20, when the number of students exceed 20, then the school owner will need to get a bigger classroom and that will cost more.

So the rent becomes an example of stepped-fixed cost