Which of the Following Statements Is True Concerning the Use

Multiple Choice

Which of the following statements is true concerning the use of linear analysis at low activity levels (below the range for which the company's facility was designed) ?

A) Linear analysis is well suited for estimating total costs at low activity levels.
B) Linear analysis likely understates total costs at low activity levels.
C) Linear analysis likely overstates total costs at low activity levels.
D) Linear analysis of low activity levels fails to capture the fact that total fixed costs decrease as more units are produced.