Question

Defining a cost as fixed or variable has no effect on whether or not the cost is considered relevant.

A. True
B. False

Answer 1

Defining a cost as fixed or variable does have an effect on whether or not the cost is considered relevant. Understanding whether a cost is fixed or variable is important in determining how costs will change as production levels change.

Step-by-step explanation:

Defining a cost as fixed or variable does have an effect on whether or not the cost is considered relevant. Fixed costs are costs that do not change regardless of the level of production, such as rent for a factory. Variable costs, on the other hand, change based on the level of production, such as material costs for producing more units. When assessing the relevance of a cost, understanding whether it is fixed or variable is important because it helps determine how costs will change as production levels change.