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ACC 560 WEEK 5 Quiz 5

TRUE-FALSE STATEMENTS

1. An task index identifies the activity that has a causal connection via a details cost.

2. A variable price remains constant per unit at assorted levels of activity.

3. A resolved cost remains constant in complete and on a per unit basis at miscellaneous levels of activity.

4. If volume boosts, all prices will rise.

5. If the activity index decreases, complete variable prices will certainly decrease proportionately.

6. Changes in the level of activity will cause unit variable and also unit resolved prices to adjust in opposite directions.

7. For CVP analysis both variable and fixed prices are assumed to have a direct connection within the relevant variety of task.

8. The relevant variety of task is the task level where the firm will earn income.

9. Costs will certainly not change in complete within the appropriate range of task.

10. The high-low technique is used in classifying a combined expense right into its variable and also resolved facets.

11. A combined expense has actually both offering and also administrative expense aspects.

12. The fixed price facet of a blended cost is the cost of having actually a company accessible.

13. For planning objectives, blended expenses are generally grouped with resolved costs.

14. The difference in between the prices at the high and low levels of task represents the resolved price aspect of a combined cost.

15. When using the high-low approach, the variable price aspect of a combined price is calculated before the resolved expense element.

16. An assumption of CVP evaluation is that all costs deserve to be classified as either variable or resolved.

17. In CVP evaluation, the term “cost” includes production expenses, and marketing and bureaucratic prices.

18. Contribution margin is the amount of revenues continuing to be after deducting expense of goods offered.

19. Unit contribution margin is the amount that each unit sold contributes towards the recoextremely of solved prices and also to revenue.

20. The contribution margin ratio is calculated by multiplying the unit contribution margin by the unit sales price.

21. Both variable and addressed costs are contained in calculating the contribution margin.

22. A CVP income statement reflects contribution margin rather of gross profit.

23. The break-even allude is where full sales equal total variable prices.

24. The break-also suggest is wbelow full sales equal full variable prices.

25. The break-even allude is equal to the fixed expenses plus net revenue.

26. If the unit contribution margin is $1 and also unit sales are 10,000 devices above the break-even volume, then net revenue will be $10,000.

27. A tarobtain net income is calculated by taking actual sales minus the margin of safety.

28. Tarobtain net revenue is the earnings objective for an individual product line.

29. The margin of security is the distinction in between sales at breakeven and also sales at a determined activity level.

30. The margin of security is the distinction in between contribution margin and also fixed expenses.

31. The task level is stood for by an task index such as straight labor hrs, systems of output, or sales dollars.

32. The fads in a lot of suppliers is to have actually even more variable prices and also fewer fixed expenses.

33. For objectives of CVP evaluation combined prices have to be classified right into their solved and variable facets.


34. The contribution margin ratio of 40% indicates that 60 cents of each sales dollar is accessible to cover fixed costs and to produce a profit.

35. A cost-volume-profit graph reflects the amount of net revenue or loss at each level of sales.

36. If variable expenses per unit are 70% of sales, resolved expenses are $290,000 and also target net income is $70,000, required sales are $1,200,000.

37. The margin of security proportion is equal to the margin of security in dollars divided by the actual or (expected) sales.

MULTIPLE CHOICE QUESTIONS

38. For an activity base to be useful in cost habits analysis.

a. the activity need to always be stated in dollars.

b. tbelow have to be a correlation in between transforms in the level of activity and also transforms in costs.

c. the activity need to constantly be proclaimed in terms of systems.

d. the activity level should be constant over a duration of time.

39. A variable expense is a expense that

a. varies per unit at eincredibly level of task.

b. occurs at various times in the time of the year.

c. varies in complete in proportion to alters in the level of task.

d. may or may not be incurred, relying on management"s discretion.

40. A cost which remains consistent per unit at assorted levels of activity is a

a. variable price.

b. addressed price.

c. mixed price.

d. production price.


41. Two expenses at Bradshaw Company kind of show up listed below for particular months of operation.

Month Amount Units Produced

Deliexceptionally costs September $ 40,000 40,000

October 55,000 60,000

Utilities September $ 84,000 40,000

October 126,000 60,000

Which form of prices are these?

a. Delivery costs and also utilities are both variable.

b. Delivery costs and utilities are both blended.

c. Utilities are mixed and also shipment expenses are variable.

d. Deliextremely costs are mixed and utilities are variable.

42. An boost in the level of activity will have actually the adhering to impacts on unit expenses for variable and also addressed costs:

Unit Variable Cost Unit Fixed Cost

a. Increases Decreases

b. Remains consistent Remains constant

c. Decreases Remains constant

d. Remains continuous Decreases

43. A resolved cost is a price which

a. varies in total via transforms in the level of activity.

b. remains consistent per unit via transforms in the level of activity.

c. varies inversely in complete via transforms in the level of activity.

d. stays constant in total with transforms in the level of task.

44. Fixed expenses normally will certainly not include

a. home taxes.

b. direct labor.

c. supervisory salaries.

d. depreciation on buildings and also equipment.

45. The boosted use of automation and also much less usage of the job-related pressure in service providers has caused a trend in the direction of an increase in

a. both variable and addressed costs.

b. fixed prices and a decrease in variable prices.

c. variable costs and a decrease in solved prices.

d. variable prices and also no change in addressed expenses.

46. Cost habits evaluation is a research of exactly how a firm"s costs

a. relate to competitors" prices.

b. relate to general price level alters.

c. respond to alters in the level of service activity.

d. respond to changes in the gross nationwide product.

47. Cost behavior analysis applies to

a. retailers.

b. wholesalers.

c. manufacturers.

d. all entities.

48. If a firm boosts its activity level,

a. costs need to remajor the exact same.

b. most costs will climb.

c. no expenses will certainly remajor the same.

d. some expenses will certainly readjust, others will certainly remajor the very same.

49. An activity index can be referred to as a cost

a. driver.

b. multiplier.

c. facet.

d. correlation.

50. Cost task indexes can aid classify costs as

a. momentary.

b. long-term.

c. variable.

d. transient.

51. Which of the adhering to is not a cost classification?

a. Mixed

b. Multiple

c. Variable

d. Fixed

52. If the task level boosts 10%, complete variable costs will

a. remain the exact same.

b. increase by more than 10%.

c. decrease by much less than 10%.

d. boost 10%.

53. Which of the adhering to costs are variable?

Cost 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 also 2

b. 1 and also 4

c. just 1

d. just 2

54. Changes in activity have a(n) _________ effect on addressed prices per unit.

a. positive

b. negative

c. inverse

d. neutral

55. Which of the adhering to is not a resolved cost?

a. Direct materials

b. Depreciation

c. Lease charge

d. Property taxes

56. Why is identification of a appropriate variety important?

a. It is required under GAAP.

b. Cost habits outside of the relevant selection is not straight, which distorts CVP evaluation.

c. It directly impacts the number of units of product a customer buys.

d. It is a expense that is incurred by a company that should be accounted for.

57. The appropriate range of activity describes the

a. geographical locations wright here the company plans to run.

b. task level wright here all prices are curvilinear.

c. levels of activity over which the company expects to run.

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d. level of task wbelow all costs are consistent.

58. Which of the complying with is not a plausible explanation of why variable costs frequently behave actually in a curvistraight fashion?