Examples of Cost Behavior
Question
A company has recently deployed Microsoft Dynamics 365 Finance.You have been hired as a Functional Consultant.
Your role will include the management of the Dynamics 365 Finance system and to provide training for members of the Accounts team.
You are providing training on the cost accounting module in the Dynamics 365 Finance system.
Which of the following are examples of cost behavior?
Answers
Explanations
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A. B. C. D.D.
The correct answer is D. Fixed, variable, semi-variable.
Cost behavior refers to how costs change as activity levels change within an organization. In other words, it's the way costs respond to changes in production or sales volume. There are three types of cost behavior:
Fixed costs: These costs remain constant regardless of the level of production or sales. Examples of fixed costs include rent, salaries, and insurance.
Variable costs: These costs vary directly with changes in production or sales volume. Examples of variable costs include raw materials, direct labor, and sales commissions.
Semi-variable costs: These costs have both fixed and variable components. The fixed component is constant, while the variable component varies with changes in production or sales volume. Examples of semi-variable costs include utilities, maintenance, and shipping.
Therefore, the correct answer is D. Fixed, variable, semi-variable, as these are the three examples of cost behavior. Answers A, B, and C are not related to cost behavior, as they describe different categorizations or groupings of costs.
