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JAMB Principles of Accounts 2000 Question 24

Question 24

Manufacturing Accounts

A fixed cost is fixed only in relation to

  1. A.the quantity of goods produced
  2. B.the quantity of goods sold
  3. C.a given period of time and a range of activities
  4. D.a given period of time and the nature of activity.
Show the answer and explanation

Answer: C (a given period of time and a range of activities)

Explanation

Fixed costs, such as rent, stay the same only within a given period and a given range of output.