Question 1

Relevant range

Accepted Answer

A) is the range of activity over which our assumptions about cost behavior are true. 
B) only applies to fixed costs. 
C) is defined as total sales minus break-even sales. 
D) increases in total as the activity level increases. 
A) is the range of activity over which our assumptions about cost behavior are true. 
B) only applies to fixed costs. 
C) is defined as total sales minus break-even sales. 
D) increases in total as the activity level increases.

Question 2

Contribution margin is equal to sales revenue less gross margin.Contribution margin is equal to sales revenue minus variable costs.

Accepted Answer

A) True 
 B)False

Question 3

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Accepted Answer

A) $1.05 
B) $1.55 
C) $2.60 
D) $5.20 
A) $1.05 
B) $1.55 
C) $2.60 
D) $5.20

Question 4

Full absorption costing divides fixed overhead between Cost of Goods Sold and period expenses.Full absorption costing divides fixed overhead between Cost of Goods Sold and inventories.

Accepted Answer

A) True 
 B)False

Question 5

Winston,which uses the high-low method,had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.What would Winston estimate its total cost to be if sales equaled 8,000 units?

Accepted Answer

A) $24,000 
B) $52,000 
C) $70,000 
D) $94,000 
A) $24,000 
B) $52,000 
C) $70,000 
D) $94,000

Question 6

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

Accepted Answer

A) $23,140 
B) $63,446 
C) $175,003 
D) $198,143 
A) $23,140 
B) $63,446 
C) $175,003 
D) $198,143

Question 7

Knox Corp has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal

Accepted Answer

A) $60,000. 
B) 30%. 
C) 70%. 
D) 10.4%. 
A) $60,000. 
B) 30%. 
C) 70%. 
D) 10.4%.

Question 8

Holly,which uses the high-low method,had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.Holly would estimate fixed costs as

Accepted Answer

A) $70,000. 
B) $16.50. 
C) $8.25. 
D) $100,000. 
A) $70,000. 
B) $16.50. 
C) $8.25. 
D) $100,000.

Question 9

A fixed cost will stay constant on a per unit basis as the volume increases.Fixed costs stay constant in total.On a per unit basis,they decrease as volume increases.

Accepted Answer

A) True 
 B)False

Question 10

Total contribution margin is equal to

Accepted Answer

A) total sales less fixed costs. 
B) fixed costs plus profits. 
C) variable costs plus profits. 
D) total sales less profits. 
A) total sales less fixed costs. 
B) fixed costs plus profits. 
C) variable costs plus profits. 
D) total sales less profits.

Question 11

The relevant range is the range in which costs remain variable.The relevant range is the range of activity over which we expect our assumptions about cost behavior to hold true.

Accepted Answer

A) True 
 B)False

Question 12

A cost that changes,in total,in direct proportion to changes in activity levels is a(n)

Accepted Answer

A) absorption cost. 
B) contribution margin. 
C) fixed cost. 
D) variable cost. 
A) absorption cost. 
B) contribution margin. 
C) fixed cost. 
D) variable cost.

Question 13

If the number of units sold is the same every month,the profit from these units will be the same every month if

Accepted Answer

A) absorption costing is used. 
B) variable costing is used. 
C) production is greater than sales. 
D) sales is greater than production. 
A) absorption costing is used. 
B) variable costing is used. 
C) production is greater than sales. 
D) sales is greater than production.

Question 14

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

Accepted Answer

A) $5 
B) $10 
C) $27.50 
D) $20 
A) $5 
B) $10 
C) $27.50 
D) $20

Question 15

R-square tells managers how much of the variability in activity is caused by variability in cost.R-square tells managers how much of the variability in cost is explained by activity.

Accepted Answer

A) True 
 B)False

Question 16

Total contribution margin is defined as

Accepted Answer

A) selling price times units sold. 
B) cost to produce times units sold. 
C) total sales revenues less total variable costs. 
D) total variable costs less fixed costs. 
A) selling price times units sold. 
B) cost to produce times units sold. 
C) total sales revenues less total variable costs. 
D) total variable costs less fixed costs.

Question 17

A mixed cost has either fixed and variable components,but not both.Mixed costs have both a fixed and a variable component.

Accepted Answer

A) True 
 B)False

Question 18

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as

Accepted Answer

A) $7.00. 
B) $4.55. 
C) $2.80. 
D) $5.26. 
A) $7.00. 
B) $4.55. 
C) $2.80. 
D) $5.26.

Question 19

Variable costing uses a contribution margin income statement.This is one of the key aspects of variable costing.

Accepted Answer

A) True 
 B)False

Question 20

Flint Enterprises had the following cost and production information for April: Inventory increased by 3,000 units during April.What is Flint Enterprise's income under absorption costing?

Accepted Answer

A) $1,400,000 
B) $1,460,000 
C) $1,745,000 
D) $1,785,000 
A) $1,400,000 
B) $1,460,000 
C) $1,745,000 
D) $1,785,000

Relevant range

Contribution margin is equal to sales revenue less gross margin.Contribution margin is equal to sales revenue minus variable costs.

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Full absorption costing divides fixed overhead between Cost of Goods Sold and period expenses.Full absorption costing divides fixed overhead between Cost of Goods Sold and inventories.

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

Knox Corp has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal

Holly,which uses the high-low method,had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.Holly would estimate fixed costs as

A fixed cost will stay constant on a per unit basis as the volume increases.Fixed costs stay constant in total.On a per unit basis,they decrease as volume increases.

Total contribution margin is equal to

The relevant range is the range in which costs remain variable.The relevant range is the range of activity over which we expect our assumptions about cost behavior to hold true.

A cost that changes,in total,in direct proportion to changes in activity levels is a(n)

If the number of units sold is the same every month,the profit from these units will be the same every month if

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

R-square tells managers how much of the variability in activity is caused by variability in cost.R-square tells managers how much of the variability in cost is explained by activity.

Total contribution margin is defined as

A mixed cost has either fixed and variable components,but not both.Mixed costs have both a fixed and a variable component.

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as

Variable costing uses a contribution margin income statement.This is one of the key aspects of variable costing.

Flint Enterprises had the following cost and production information for April: Inventory increased by 3,000 units during April.What is Flint Enterprise's income under absorption costing?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 5: Cost Behavior

Relevant range

Contribution margin is equal to sales revenue less gross margin.Contribution margin is equal to sales revenue minus variable costs.

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Full absorption costing divides fixed overhead between Cost of Goods Sold and period expenses.Full absorption costing divides fixed overhead between Cost of Goods Sold and inventories.

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

Knox Corp has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal

Holly,which uses the high-low method,had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.Holly would estimate fixed costs as

A fixed cost will stay constant on a per unit basis as the volume increases.Fixed costs stay constant in total.On a per unit basis,they decrease as volume increases.

Total contribution margin is equal to

The relevant range is the range in which costs remain variable.The relevant range is the range of activity over which we expect our assumptions about cost behavior to hold true.

A cost that changes,in total,in direct proportion to changes in activity levels is a(n)

If the number of units sold is the same every month,the profit from these units will be the same every month if

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

R-square tells managers how much of the variability in activity is caused by variability in cost.R-square tells managers how much of the variability in cost is explained by activity.

Total contribution margin is defined as

A mixed cost has either fixed and variable components,but not both.Mixed costs have both a fixed and a variable component.

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as

Variable costing uses a contribution margin income statement.This is one of the key aspects of variable costing.

Flint Enterprises had the following cost and production information for April: Inventory increased by 3,000 units during April.What is Flint Enterprise's income under absorption costing?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters