Question

In cost-volume-profit analysis, all costs are classified into the following two categories: a.variable costs and fixed costs b.discretionary costs and sunk costs c.sunk costs and fixed costs d.mixed costs and variable costs

Answer 1

Answer: a.variable costs and fixed cost

Explanation:

In cost-volume-profit analysis, all costs are classified into the fixed cost and the variable cost. The fixed cost is the type of cost which doesn't depend on the production level because it is normally constant and doesn't varies.

Variable cost is a cost that varies with production level. Examples of variable cost are the cost of raw materials that are used in production and the direct labor costs.