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Part 1
"There is no such thing as a fixed cost. All costs can be 'unfixed' given sufficient time." Do you agree? What is the implication of your answer for CVP analysis?
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Part 1
A.
Once an item is classified as either fixed or variable, it cannot be changed. The classification of items as either fixed or variable has no impact on CVP analysis; therefore, the decision is irrelevent anyway.
B.
Once an item is classified as either fixed or variable, it cannot be changed. CVP analysis depends upon these classifications remaining the same; therefore, any change would cause the analysis to lose its usefulness.
C.
Items classified as fixed in the short run may become variable with a longer time horizon (period of time for a decision). CVP analysis depends upon these classifications remaining the same, though. Therefore, any change would cause the analysis to lose its usefulness.
D.
Many items classified as a fixed in the short run may become variable costs with a longer time horizon (period of time for a decision). CVP is not made any less relevant when the time horizon lengthens.