# Accounting 202 - Chapter 6

28 Questions

Cost Behavior

• 1.
• A.

They will decrease as production increases within the relevant range

• B.

They will increase as production decreases within the relevant range

• C.

They will remain the same as production levels change within the relevant range

• D.

They will decrease as production decreases within the relevant range

• 2.
Which of the following statements is TRUE with respect to total variable costs?
• A.

They will remain the same as production levels change within the relevant range.

• B.

They will decrease as production increases within the relevant range.

• C.

They will decrease as production decreases within the relevant range.

• D.

They will increase as production decreases within the relevant range.

• 3.
Which of the following statements is TRUE with respect to total fixed costs?
• A.

They will increase as production decreases within the relevant range.

• B.

They will remain the same as production levels change within the relevant range.

• C.

They will decrease as production increases within the relevant range.

• D.

They will decrease as production decreases within the relevant range.

• 4.
Within the relevant range, which of the following statements is TRUE with respect to fixed costs per unit?
• A.

They will increase as production increases.

• B.

They will decrease as production decreases.

• C.

They will increase as production decreases.

• D.

They will remain the same as production levels change.

• 5.
Which of the following is a fixed cost?
• A.

Direct materials cost

• B.

Direct labor cost

• C.

Sales commissions expense

• D.

Straight-line depreciation expense

• 6.
Which of the following statements describes variable costs?
• A.

They are fixed per unit and vary in total.

• B.

They are fixed in total.

• C.

They vary per unit of output.

• D.

They decrease per unit as production volume increases.

• 7.
Renting a car and paying \$15 per day plus \$.03 per mile driven is an example of what type of cost?
• A.

Conversion cost

• B.

Fixed cost

• C.

Mixed cost

• D.

Variable cost

• 8.
For most businesses, annual straight line depreciation expense on the company’s building is what type of cost?
• A.

Variable

• B.

Fixed

• C.

Mixed

• D.

Step

• 9.
Which of the following would be considered a discretionary fixed cost?
• A.

Property taxes and insurance

• B.

Depreciation

• C.

Employees wages

• D.

• 10.
Which of the following would be considered a committed fixed cost?
• A.

Research and Development

• B.

Depreciation

• C.

Office holiday party

• D.

• 11.
Management has little or no control over:
• A.

Committed fixed costs.

• B.

Discretionary fixed costs.

• C.

All fixed costs.

• D.

Any of the above.

• 12.
Which of the following cost behaviors cannot be accurately represented by a single straight line?
• A.

Step costs

• B.

Mixed costs

• C.

Fixed costs

• D.

Variable costs

• 13.
When predicting costs at different volumes, managers should consider which of the following?
• A.

The relevant range of the cost

• B.

The type of cost behavior

• C.

Neither of the above

• D.

Both of the above

• 14.
• A.

Fixed

• B.

Mixed

• C.

Step

• D.

Variable

• 15.
Using account analysis, what type of cost is the local phone service which charges a flat fee for unlimited local calls?
• A.

Fixed

• B.

Mixed

• C.

Step

• D.

Variable

• 16.
Using account analysis, what type of cost is Satellite TV when the charge is \$30.00 per month plus \$3.99 for pay-per-view movies?
• A.

Fixed

• B.

Mixed

• C.

Step

• D.

Variable

• 17.
Manufacturing overhead is usually what type of cost?
• A.

Variable

• B.

Fixed

• C.

Mixed

• D.

Step

• 18.
When managers use their judgment to classify costs as variable, fixed, or mixed, which method are they using?
• A.

Account analysis

• B.

High-low method

• C.

Regression analysis

• D.

Low-high method

• 19.
The data points with the________ and the ________ should be selected for use in the high-low method.
• A.

Highest volume; the lowest volume

• B.

Highest cost; the lowest cost

• C.

Highest volume; the lowest cost

• D.

Highest cost; the lowest volume

• 20.
A regression equation’s fixed cost component is represented by the__________ on the regression analysis output.
• A.

Intercept coefficient

• B.

X variable 1 coefficient

• C.

R-square

• D.

Residual

• 21.
When predicting costs at other volumes using a cost equation derived from either the high-low method or regression analysis, managers should consider:
• A.

Outliers

• B.

General inflation

• C.

Seasonality

• D.

All of the above

• 22.
On a traditional income statement, sales revenue less cost of goods sold equals:
• A.

Contribution margin

• B.

Gross profit

• C.

Operating income

• D.

Operating expenses

• 23.
Traditional income statements organize costs by:
• A.

Function

• B.

Behavior

• C.

Discretionary vs. committed

• D.

No particular manner. Costs are listed in any order

• 24.
The contribution margin is equal to:
• A.

Sales minus cost of goods sold

• B.

Sales minus variable expenses

• C.

Sales minus fixed expenses

• D.

Sales minus operating expenses

• 25.
Cotown Corporation has total sales revenues of \$300,000.  If their total fixed costs are \$50,000 and their total variable costs are \$175,000, the contribution margin is:
• A.

\$125,000

• B.

\$475,000

• C.

\$225,000

• D.

\$250,000

• 26.
On a contribution margin income statement, all fixed costs are listed:
• A.

Above the contribution margin line

• B.

Above the gross profit line

• C.

Below the contribution margin line

• D.

Below the gross profit line

• 27.
On a contribution margin income statement, all variable costs are listed:
• A.

Above the contribution margin line

• B.

Above the gross profit line

• C.

Below the contribution margin line.

• D.

Below the gross profit line

• 28.
Zucca Company has a contribution margin per unit of \$54.  If 6,000 more items are sold, and fixed expenses remain the same, the net change in operating income will be:
• A.

\$(324,000)

• B.

\$324,000

• C.

\$111

• D.

\$6,000

Related Quizzes
Related Topics
Featured Quizzes