Accounting 202 - Chapter 6

28 Questions | Total Attempts: 244

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Accounting Quizzes & Trivia

Cost behavior is how the cost of products changes with the level of activity in an organization. This cost is highly affected by sales volumes. These costs include fixed, mixed and variable costs. Test your knowledge on cost behavior by taking up the quiz below. All the best as you tacked it.


Questions and Answers
  • 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. 
    • 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. 
    • 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. 

      Advertising

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

      Research and Development

    • B. 

      Depreciation

    • C. 

      Office holiday party

    • D. 

      Advertising

  • 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. 
    • A. 

      The relevant range of the cost

    • B. 

      The type of cost behavior

    • C. 

      Neither of the above

    • D. 

      Both of the above

  • 14. 
    Using account analysis, what type of cost is utilities if you are charged $40 for the first 200 kilowatts hours, $85 for 201- 400 kilowatt hours, and $135 + or - for 401-600 kilowatt hours?
    • 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. 
    • 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