Question

The activity base selected determines whether a cost behaves as a variable cost or fixed cost.

A. True
B. False

Answer 1

The activity base selected determines whether a cost behaves as a variable cost or fixed cost. This statement is true.

The correct answer is A.

Step-by-step explanation:

Variable cost is a cost that fluctuates with respect to activity level while fixed cost is a cost that remains unchanged irrespective of activity level.

Thus, the activity base selected determines whether whether a cost is fixed or variable.