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ACC 560 main 5 Quiz 5

TRUE-FALSE STATEMENTS

1. An task index identifies the activity that has a causal partnership with a specific cost.

2. A variable expense remains consistent per unit at various levels of activity.

3. A fixed price remains consistent in total and also on a every unit basis at various levels of activity.

4. If volume increases, all prices will increase.

5. If the activity index decreases, total variable expenses will to decrease proportionately.

6. Changes in the level of task will reason unit variable and also unit fixed prices to change in the opposite directions.

7. Because that CVP evaluation both variable and also fixed costs are assumed to have a direct relationship in ~ the relevant selection of activity.

8. The relevant selection of task is the activity level where the firm will certainly earn income.

9. Costs will not adjust in full within the relevant selection of activity.

10. The high-low an approach is supplied in classifying a mixed cost into that is variable and fixed elements.

11. A mixed price has both selling and also administrative price elements.

12. The solved cost aspect of a mixed price is the cost of having actually a organization available.

13. Because that planning purposes, mixed costs are generally grouped with solved costs.

14. The difference in between the costs at the high and also low levels of activity represents the addressed cost element of a mixed cost.

15. When using the high-low method, the variable cost element of a mixed expense is calculated prior to the fixed price element.

16. An assumption of CVP analysis is that all costs can be classified together either variable or fixed.

17. In CVP analysis, the term “cost” consists of manufacturing costs, and also selling and also administrative expenses.

18. Contribution margin is the amount of earnings remaining after deducting price of products sold.

19. Unit contribution margin is the amount the each unit sold contributes towards the recovery of addressed costs and to income.

20. The contribution margin proportion is calculated by multiplying the unit donation margin through the unit sales price.

21. Both variable and fixed expenses are consisted of in calculating the contribution margin.

22. A CVP earnings statement shows contribution margin rather of gun profit.

23. The break-even suggest is where complete sales equal complete variable costs.

24. The break-even allude is where complete sales equal full variable costs.

25. The break-even suggest is same to the fixed costs plus net income.

26. If the unit contribution margin is $1 and unit sales are 10,000 units over the break-even volume, then net earnings will be $10,000.

27. A target net income is calculation by taking actual sales minus the margin of safety.

28. Target net income is the earnings objective because that an separation, personal, instance product line.

29. The margin of security is the difference in between sales at breakeven and sales at a determined task level.

30. The margin of safety is the difference in between contribution margin and fixed costs.

31. The activity level is stood for by an task index together as direct labor hours, units of output, or sales dollars.

32. The fads in many companies is to have more variable costs and fewer fixed costs.

33. For objectives of CVP analysis mixed prices must be classified right into their fixed and also variable elements.


34. The contribution margin ratio of 40% means that 60 cent of every sales disagreement is easily accessible to cover addressed costs and also to develop a profit.

35. A cost-volume-profit graph mirrors the quantity of net income or loss at each level of sales.

36. If variable prices per unit are 70% that sales, fixed costs are $290,000 and also target net earnings is $70,000, forced sales room $1,200,000.

37. The margin the safety ratio is equal to the margin of safety in dollars divided by the really or (expected) sales.

MULTIPLE selection QUESTIONS

38. Because that an task base to be helpful in cost habits analysis.

a. The activity should constantly be stated in dollars.

b. There need to be a correlation in between changes in the level of task and transforms in costs.

c. The task should always be proclaimed in regards to units.

d. The task level need to be consistent over a period of time.

39. A variable cost is a expense that

a. Varies every unit at every level that activity.

b. Wake up at various times throughout the year.

c. Different in complete in ratio to alters in the level of activity.

d. Might or may not it is in incurred, depending on management"s discretion.

40. A expense which remains consistent per unit at various levels of activity is a

a. Variable cost.

b. Solved cost.

c. Mixed cost.

d. Manufacturing cost.


41. Two costs at Bradshaw agency appear listed below for particular months the operation.

Month Amount systems Produced

Delivery costs September $ 40,000 40,000

October 55,000 60,000

Utilities September $ 84,000 40,000

October 126,000 60,000

Which type of costs are these?

a. Distribution costs and also utilities are both variable.

b. Distribution costs and also utilities room both mixed.

c. Utilities are mixed and delivery prices are variable.

d. Delivery prices are mixed and utilities room variable.

42. Rise in the level of task will have the following results on unit expenses for variable and fixed costs:

Unit Variable expense Unit resolved Cost

a. Increases Decreases

b. Remains continuous Remains constant

c. Decreases continues to be constant

d. Remains consistent Decreases

43. A fixed expense is a cost which

a. Different in complete with transforms in the level the activity.

b. Remains continuous per unit with transforms in the level that activity.

c. Varies inversely in complete with alters in the level the activity.

d. Remains consistent in complete with changes in the level that activity.

44. Fixed expenses normally will certainly not include

a. Residential or commercial property taxes.

b. Direct labor.

c. Supervisory salaries.

d. Depreciation on buildings and also equipment.

45. The boosted use the automation and less use of the work pressure in companies has caused a tendency towards an increase in

a. Both variable and fixed costs.

b. Solved costs and a diminish in change costs.

c. Variable costs and also a diminish in fixed costs.

d. Variable costs and no readjust in fixed costs.

46. Cost behavior analysis is a study of just how a firm"s costs

a. Relate to competitors" costs.

b. Relate to basic price level changes.

c. Answer to transforms in the level of organization activity.

d. Answer to transforms in the gross national product.

47. Price behavior evaluation applies to

a. Retailers.

b. Wholesalers.

c. Manufacturers.

d. All entities.

48. If a firm increases its task level,

a. Prices should remain the same.

b. Most expenses will rise.

c. No prices will continue to be the same.

d. Some expenses will change, others will remain the same.

49. An task index might be described as a cost

a. Driver.

b. Multiplier.

c. Element.

d. Correlation.

50. Cost activity indexes might aid classify prices as

a. Temporary.

b. Permanent.

c. Variable.

d. Transient.

51. Which of the following is no a cost classification?

a. Mixed

b. Multiple

c. Variable

d. Fixed

52. If the task level increases 10%, total variable costs will

a. Stay the same.

b. Rise by an ext than 10%.

c. To decrease by less than 10%.

d. Rise 10%.

53. I m sorry of the following costs are variable?

price 10,000 units 30,000 Units

1. $100,000 $300,000

2. 40,000 240,000

3. 90,000 90,000

4. 50,000 150,000

a. 1 and 2

b. 1 and 4

c. Just 1

d. Just 2

54. Alters in activity have a(n) _________ result on fixed prices per unit.

a. Positive

b. Negative

c. Inverse

d. Neutral

55. I beg your pardon of the following is not a resolved cost?

a. Direct materials

b. Depreciation

c. Lease charge

d. Residential or commercial property taxes

56. Why is to know of a relevant variety important?

a. The is required under GAAP.

b. Cost actions outside that the relevant range is not linear, i m sorry distorts CVP analysis.

c. It directly impacts the variety of units that product a client buys.

d. It is a expense that is occurs by a firm that need to be accounted for.

57. The relevant variety of task refers to the

a. Geographical areas where the agency plans to operate.

b. Task level whereby all costs are curvilinear.

c. Level of task over which the agency expects to operate.

See more: Solved: Which Of The Following Is Not True Of Dietary Fibers ?

d. Level of task where all prices are constant.

58. I m sorry of the complying with is not a plausible explanation of why variable costs often behave in a curvilinear fashion?