Which of the following statements are true? 1. Cost behavior is considered curvilinear whenever a straight line is a reasonable approximation for the relation between cost and activity. 2. As activity decreases within the relevant range, fixed costs remain constant on a per unit basis. 3. In account analysis, an account is classified as either variable or fixed based on an analyst's prior knowledge of how the cost in the account behaves. Only statement II is true. Only statement III is true. Only statement I is true. All statements are true.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 18?
84
-tVi
...S
QUESTION 18
Which of the following statements are true?
1. Cost behavior is considered curvilinear whenever a straight line is a
reasonable approximation for the relation between cost and activity.
2. As activity decreases within the relevant range, fixed costs remain constant
on a per unit basis.
3. In account analysis, an account is classified as either variable or fixed
based on an analyst's prior knowledge of how the cost in the account
behaves.
Only statement II is true.
Only statement III is true.
Only statement I is true.
All statements are true.
Transcribed Image Text:84 -tVi ...S QUESTION 18 Which of the following statements are true? 1. Cost behavior is considered curvilinear whenever a straight line is a reasonable approximation for the relation between cost and activity. 2. As activity decreases within the relevant range, fixed costs remain constant on a per unit basis. 3. In account analysis, an account is classified as either variable or fixed based on an analyst's prior knowledge of how the cost in the account behaves. Only statement II is true. Only statement III is true. Only statement I is true. All statements are true.
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