ACCT CH11 – Flashcards
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Cost remain constant on a per-unit level as the level of activity changes are called
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variable costs
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Which of the following describes the behavior of the variable cost per unit?
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Remains constant with changes in production
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Costs that vary in total in direct proportion to changes in total activity level are called
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variable costs
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Which of the following is an example of a cost that varies in total as the number of units changes
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Direct materials costs
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As production increases, what would you expect to happen to fixed costs per unit?
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Decreases
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Which of the following statements is true regarding fixed and variable costs
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Fixed costs are fixed in total, and variable costs are fixed per unit
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Which of the following describes the behavior of the fixed cost per unit?
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Decreases with increasing production
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Knowing how costs behave is useful to management for all the following reasons EXCEPT for
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predicting customer demand
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As production increases, what should happen to the variable costs per unit?
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stay the same
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In cost-volume-profit analysis, all costs are classified into following two categories:
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variable costs and fixed costs
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The contribution margin ratio is
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the same as the profit- volume ratio
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Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit
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Contribution margin ratio
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Which of the following conditions would cause the break-even point to decrease
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unit variable cost increases
