- 1 Marks
Question
Which of the following describes cost behavior?
A. The effect of cost on company performance
B. The total cost of running a business
C. The movement of material costs during inflation
D. How total costs react to changes in output
E. The ratio of costs to turnover
Answer
D. How total costs react to changes in output
Explanation: Cost behavior refers to the way costs change in response to variations in business activity levels, particularly output. This includes fixed, variable, and mixed costs. The answer was chosen because it best reflects the definition of cost behavior, which is key in managing costs and decision-making processes.
- Tags: Cost behavior, Cost Management
- Level: Level 1
- Topic: Cost Classifications
- Series: MAY 2018
- Uploader: Theophilus