Final answer:
The managerial judgment method is used to separate mixed costs into fixed and variable components, relying on managerial experience without complex calculations, contrary to the claim that it involves too many complications or is rarely used.
Step-by-step explanation:
The correct answer to the question of which statement is true about the managerial judgment method of determining cost behavior is a. Managers identify mixed costs and divide them into fixed and variable components. This approach relies on a manager's experience and knowledge of the business to estimate the behavior of costs, particularly mixed costs, which contain both variable and fixed cost elements. The method does not rely solely on the previous period's costs and is more qualitative than quantitative, meaning it involves fewer specific calculations. Additionally, managerial judgment is often used in conjunction with other methods rather than being rare. Understanding and breaking down total costs into categories such as fixed costs, variable costs, marginal costs, average total costs, and average variable costs is important as it provides insights that are critical to economic decisions related to production and pricing.