Expenses can be categorized by whether the cost incurred is directly related to

Question

Expenses can be categorized by whether the cost incurred is directly related to production or not. Which of the following is correct? a. If directly related, it will not change with the production level, thus called Fixed Cost. b. If directly related, it will change with the production level, thus called Fixed Cost. c. If not directly related, it will not change with the production level, thus called Variable Cost. d. If not directly related, it will change with the production level, thus called Variable Cost. e. None of the above is a correct statement

Explanation / Answer

e. None of the above is a correct statement.

Expenses which are directly related with the production are changed with the volume of production and is categorised as variable expenses.

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