Question 1

The variable cost per unit ____________ as the number of sales increase.

Accepted Answer

A)   decreases
B)   changes
C)   remains constant
D)   increases C

Question 2

Indicate whether each of the following costs of productive output is usually variable (V) or fixed (F):
a. Machine operator's hourly wages
b. City operating license
c. Machine helper's wages
d. Wiring used in radios
e. Indirect materials
f. Property insurance
g. Gasoline for delivery truck
h. Real estate taxes

Accepted Answer

a. V
b. F
c. V
d. V
e. V
f. F
g. V
h. F

Question 3

If fixed costs are $80,000, the contribution margin is $25 per unit, and the targeted profit is $30,000, then the required unit sales are

Accepted Answer

A)   4,400 units.
B)   2,000 units.
C)   4,500 units.
D)   2,500 units. A

Question 4

An increase in the unit sales price will cause the breakeven point to increase.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following costs is a variable manufacturing cost?

Accepted Answer

A)   Depreciation costs computed using the straight-line method
B)   Factory rent
C)   President's salary
D)   Direct labor costs

Question 6

Telephone costs are an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 7

The graph below depicts two different types of costs. Questions related to the graph should be answered in the spaces provided.  
a. The line H-B represents what type of cost? ______________________
b. Production at point J versus point L would __________ total variable costs.
c. Production at point J versus point L would __________ per unit fixed costs.
d. What is a possible reason that line G-A increases at point A to a new horizontal line?
e. What kind of cost is depicted by the line from point G to point A?

Accepted Answer

The answer of The graph below depicts two different types...

Question 8

If fixed costs are $24,000, variable costs are $25 per unit, and the product sells for $45, the total contribution margin at the breakeven point is $1,200.

Accepted Answer

A) True 
 B)False

Question 9

The breakeven point is

Accepted Answer

A)   where fixed and variable costs reach the upper level of the relevant range.
B)   the level of activity where all fixed costs are recovered.
C)   where total revenue equals total costs.
D)   where fixed costs meet variable costs.

Question 10

If direct materials costs are decreased, the breakeven point will decrease.

Accepted Answer

A) True 
 B)False

Question 11

Listed below are selected costs of a sports car manufacturer at a production level of 4,000 cars. (a) Identify three fixed costs. (b) Support your answer by illustrating the cost behavior pattern per unit and in total as the annual volume of motorcycles produced increases from 4,000 cars to 8,000 cars for one fixed cost. (Note: The production increase is within the relevant range.)

Accepted Answer

The answer of Listed below are selected costs of a...

Question 12

Repair bills for large machinery may include a flat fee for the visit to the company's premises plus additional labor charges per hour of repair work and various costs of replacement parts needed. What type of cost is the repair?

Accepted Answer

A)   Selling cost
B)   Variable cost
C)   Fixed cost
D)   Mixed cost

Question 13

At production levels beyond the breakeven point,

Accepted Answer

A)   fixed costs are not recovered.
B)   profit is negative.
C)   variable costs are zero.
D)   profit is positive.

Question 14

Dilly LLC, wants to make a profit of $30,000. It has variable costs of $99 per unit and fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold?

Accepted Answer

A)   $84
B)   $69
C)   $99
D)   $109

Question 15

Given the following cost and activity observations for Leno Enterprises' utilities, use the high-low method to calculate Leno's variable utilities cost per machine hour. $\begin{array}{lrr} 
& \text { Cost } & \text { Machine Hours } \
\text { September } & \$ 4,100 & 22,000 \
\text { October } & 3,700 & 18,000 \
\text { November } & 3,900 & 19,000 \
\text { December } & 4,500 & 28,000 \
\hline
\end{array}$

Accepted Answer

A)   $0.08
B)   $4.86
C)   $0.25
D)   $12.50

Question 16

Breakeven, simply, is when total costs equal total revenues.

Accepted Answer

A) True 
 B)False

Question 17

The relevant range of activity is the range in which actual operations are likely to occur.

Accepted Answer

A) True 
 B)False

Question 18

Edward Cheezer's makes and sells frozen four-cheese pizzas, New York-style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000. The number of pizzas that must be sold to obtain a monthly profit of $20,000 is

Accepted Answer

A)   2,000 pizzas.
B)   5,000 pizzas.
C)   2,500 pizzas.
D)   7,500 pizzas.

Question 19

Cost behavior analysis is not useful to a service business.

Accepted Answer

A) True 
 B)False

Question 20

The breakeven point is the level of activity at which fixed costs are recovered.

Accepted Answer

A) True 
 B)False

Exam 23: Cost Behavior Analysis

The variable cost per unit ____________ as the number of sales increase.

If fixed costs are $80,000, the contribution margin is $25 per unit, and the targeted profit is $30,000, then the required unit sales are

An increase in the unit sales price will cause the breakeven point to increase.

Which of the following costs is a variable manufacturing cost?

Telephone costs are an example of a mixed cost.

If fixed costs are $24,000, variable costs are $25 per unit, and the product sells for $45, the total contribution margin at the breakeven point is $1,200.

The breakeven point is

If direct materials costs are decreased, the breakeven point will decrease.

Repair bills for large machinery may include a flat fee for the visit to the company's premises plus additional labor charges per hour of repair work and various costs of replacement parts needed. What type of cost is the repair?

At production levels beyond the breakeven point,

Dilly LLC, wants to make a profit of $30,000. It has variable costs of $99 per unit and fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold?

Breakeven, simply, is when total costs equal total revenues.

The relevant range of activity is the range in which actual operations are likely to occur.

Edward Cheezer's makes and sells frozen four-cheese pizzas, New York-style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000. The number of pizzas that must be sold to obtain a monthly profit of $20,000 is

Cost behavior analysis is not useful to a service business.

The breakeven point is the level of activity at which fixed costs are recovered.