Question

Which of the following cost behaviors cannot be accurately represented by a single straight​ line? A. Fixed costs B. Step costs C. Variable costs D. Mixed costs

Answer 1

Answer:

B. Step costs

Explanation:

Step cost cannot be represented by a straight single line because it changes the line at different point to reflect the different step at which costs are involved. Fixed cost can be represented by a single horizontal line. variable and mixed cost is also represented by a single diagonal / steep line. So the correct option is B. Step costs.

Answer 2

Answer: B. Step costs

Explanation: Step costs cannot be accurately represented by a single straight​ line. This is because of its unusual step-like manner—horizontally over a range, then vertically, then horizontally, and so on. Step costs are expenses that change disproportionately when production levels or activity levels of any firm, increases or decreases—they are constant for a given level of activity, but increase or decrease once a threshold is crossed.

Step costing is very important when a company is about to achieve a new and higher activity level or if activity is falling off and operations must be reduced.