Question -
1. How are fixed costs similar to step fixed costs? How are fixed costs different from step fixed costs? Give an example of a step fixed cost and describe why that cost is not considered to be a fixed cost.
2. Why is it important to keep the relevant range in mind when predicting total costs?
3. A company has adopted a lean production philosophy and has cut its inventory levels significantly. Describe the impact on the company's external financial statements as a result of this inventory reduction. Also, describe the impact of the inventory reduction on the company's internal financial statements which are prepared using variable costing.