[amp_mcq option1=”time horizons are long” option2=”time horizons are short” option3=”time horizons are irrelevant” option4=”time horizons are relevant” correct=”option2″]<\/p>\n
The correct answer is: B. time horizons are short<\/strong>.<\/p>\n A variable cost is a cost that changes in proportion to the changes in the level of output. For example, the cost of raw materials is a variable cost because it increases as the number of units produced increases.<\/p>\n The time horizon is the period of time over which a cost is incurred. For short-term planning, variable costs are more relevant than fixed costs. This is because variable costs can be changed more easily in the short term than fixed costs.<\/p>\n For example, if a company is planning to increase production for the next quarter, it can increase the amount of raw materials it purchases. However, it cannot easily change the amount of rent it pays for its factory.<\/p>\n Therefore, the chances of a cost being considered as variable are more if the time horizons are short.<\/p>\n Option A is incorrect because variable costs are more relevant for short-term planning than for long-term planning.<\/p>\n Option C is incorrect because time horizons are relevant for determining whether a cost is variable or fixed.<\/p>\n Option D is incorrect because time horizons are not irrelevant for determining whether a cost is variable or fixed.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”time horizons are long” option2=”time horizons are short” option3=”time horizons are irrelevant” option4=”time horizons are relevant” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-43312","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n