Costs are classified as fixed or variable on basis of

The correct answer is: D. both a and b

Costs are classified as fixed or variable on the basis of a specific activity and a given time period.

• Fixed costs are costs that do not change in total with changes in the level of activity. For example, rent is a fixed cost because it does not change regardless of how much product is produced.
• Variable costs are costs that change in total in direct proportion to changes in the level of activity. For example, the cost of raw materials is a variable cost because it changes in direct proportion to the number of units produced.

The time period over which costs are analyzed can also