1. which of the following statements about cost behavior is true?

1.  Which of the following statements about cost behavior is true? 

 

 A costs item that is classified as “variable” relative to one activity base may be classified as “fixed” relative to another activity base. 

The concept of “relevant range” applies to fixed costs but not to variable costs. 

As output increases, fixed cost per unit increases. 

As output increases, mixed cost per unit increases.

 

2.  Which of the following costs changes in direct proportion to a change in the activity level? 

 

Fixed cost. 

Variable cost. 

Step-variable cost. 

Semi-variable cost. 

 

3.  The Eola Hills Company has estimated the following cost formulas for overhead:

 Cost Formula:  Lubricants $2,500 plus $0.50 per machine-hour Utilities $3,000 plus $0.60 per machine-hour Depreciation $1,000 Maintenance $1,200 plus $0.10 per machine-hour Machine setup $ 0.30 per machine-hour

 Based on these cost formulas, the total overhead cost expected at an activity level of 500 machine hours is: 

 

$7700.

$8450.

$7900. 

$8350. 

 

4.  A product sells for $15 per unit and has variable expenses of $9 per unit. Fixed expenses total $70,000 per month. How many units of the product must be sold each month to yield a monthly profit of $20,000? 

 

10,000 units

3,750 units 

6,000 units 

15,000 units  

 

5.  Which of the following statements about cost-volume-profit analysis is false? 

 

A company selling multiple products should use the contribution margin ratio method to perform CVP analysis. 

The break-even point is the sales level at which the total contribution margin is equal to total fixed costs. 

An assumption of CVP analysis is that productivity improves over time. 

An assumption of CVP analysis is that variable costs are linear. 

 

6.  Which of the following would take place if a company were forced to increase its variable cost per unit? 

 

Contribution Margin:              Break-even Point:

Increase                        Increase

Increase                                    Increase: 

Decrease                                   Increase

Decrease                       Decrease 

 

7.  Richard Hamilton has a fast-food franchise and must pay a franchise fee equal to $35,000 plus 3% of gross sales. In terms of cost behavior, the fee is a: 

 

fixed cost. 

variable cost. 

mixed cost. 

step-fixed cost. 

 

8.  Which of the following statements about operating leverage is false? 

 

A change in sales volume will affect a company’s operating leverage. 

The degree of operating leverage is highest in companies that have relatively high fixed costs and relatively low variable costs in proportion to total coats. 

If a company has an operating leverage of “4,” then a 10% increase in sales will result in a 40% increase in net income. 

The net income of a company with a relatively low operating leverage will be more sensitive to changes in sales volume than for a company with a relatively high operating leverage.

 

9.  The following information is available for the Skyway Company for 20X5: Sales $200,000 Variable expenses 140,000 Fixed expenses 40,000 What was Skyway’s contribution-margin ratio for 20X5? 

 

20% 

80% 

70% 

30%    

 

10.  Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company’s utilities cost. The company’s relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

 

 

Month      Utilities      Machine Hours

January `$ 8,700         800 

February `8,360            720 

March `8,950             810 

April `9,360              920 

May `9,625              950 

June` 9,150              900 

 

The variable utilities cost per machine hour is: 

 

$5.00. 

$5.50.    

$0.18.

 $4.50. 

 

11.  Atlanta, Inc., which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company’s utilities cost. The company’s relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year:

 

Month         Utilities              Machine Hours 

 

January      $ 8,700             800 

February           8,360          720 

March              8,950          810 

April                 9,360         920 

May                 9,625         950 

June                 9,150      900 

 

The fixed utilities cost per month is: 

 

$5,100. 

$3,764. 

$4,400.   

$4,760. 

 

12.  The following information is available for Forrest Company: Sales price: $90 per unit Variable cost: $35 per unit Fixed cost: $37,500 If the variable cost per unit is increased by $7 and the total fixed cost is increased by $4,500, what will be the new break-even point in units? 

 

1,000 

875       

1,429 

467 

 

13.  Fliptop’s indirect materials cost for two recent months was as follows: 

 

Production in Units Indirect Materials Cost

March 1,200 $2,100

October 1,400 $2,300 

 

The cost behavior of indirect materials costs at Fliptop is best classified as: 

 

Mixed     

Variable 

Fixed 

 

14.  The following data are available for Bendo Co.: Sales: $700,000 Variable cost: 390,000 Fixed cost: 250,000 Bendo’s break-even point in dollars is:

 

 $696,429 

$448,718 

$700,000 

$564,516   

 

15.  Wilson sells a single product for $70 that has a variable cost of $45. Fixed costs at the break-even point amount to $15 per unit. If the company sells one unit in excess of its break-even volume, the bottom-line profit will be: 

 

$15. 

$45. 

$55. 

$25

 

16. An example of a committed fixed cost is: 

 

property taxes on a factory building. 

executive travel expenses. 

a training program for salespersons. 

research and development for new products.

 

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency