Chapter 21 QUIZ 219 – Flashcards

Cost behavior refers to the manner in which A. a cost is allocated to products B. a cost is used in setting selling prices C. a cost is estimated D. a cost changes as the related activity changes

Costs that remain constant in total dollar amount as the level of activity changes are called A. variable costs B. fixed costs C. mixed costs D. product costs

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes? A. units-of-production depreciation on factory equipment B. direct materials C. direct labor D. salary of a factory supervisor

Which of the following describes the behavior of the fixed cost per unit? A. decreases with increasing production B. decreases with decreasing production C. remains constant with changes in production D. increases with increasing production

Most operating decisions of management focus on a narrow range of activity called the A. strategic level of production B. optimal level of production C. relevant range of production D. tactical operating level of production

Which of the following describes the behavior of a variable cost per unit? A. varies in increasing proportion with changes in the activity level B. varies in direct proportion with the activity level B. remains constant with changes in the activity level C. varies in decreasing proportion with changes in the activity level

For purposes of analysis, mixed costs are A. separated into their variable and fixed cost components B. classified as variable costs C. classified as fixed costs D. classified as period costs

The contribution margin ratio is A. the same as the profit-volume ratio B. the same as profit C. the same as the variable cost ratio D. the portion of equity contributed by the stockholders

If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit? A. 10,000 units B. 25,000 units C. 20,000 units D. 400,000 units