With a step fixed-cost function ________. A) fixed cost changes proportionally w

Question

With a step fixed-cost function ________.              

A) fixed cost changes proportionally with the level of activity

B) the cost varies with the changes in the activity

C) fixed cost is often approximated with a continuous variable-cost function

D) the cost remains the same over wide ranges of the activity in each relevant range

The ideal database for estimating cost functions contains ________.            

A) only the independent variable and not the dependent variable

B) numerous cost driver observations

C) cost driver observations spanning a narrow range

D) a few values of the cost driver that are grouped closely together

To complete the first setup on a new machine took an employee 300 minutes. Using an 85% cumulative average-time learning curve indicates that the second setup on the new machine is expected to take?

127.50, 277.50, 255, or 210 minutes

Explanation / Answer

With a step fixed-cost function

answer is

D) the cost remains the same over wide ranges of the activity in each relevant range

The ideal database for estimating cost functions contains

B) numerous cost driver observations

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