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ACC 560 WEEK 5 Quiz 5

TRUE-FALSE STATEMENTS

1. An task index identifies the task that has a causal connection via a specific expense.

2. A variable cost continues to be constant per unit at assorted levels of activity.

3. A solved cost remains constant in full and on a per unit basis at various levels of activity.

4. If volume increases, all costs will increase.

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

6. Changes in the level of activity will certainly reason unit variable and also unit fixed expenses to readjust in opposite directions.

7. For CVP evaluation both variable and also resolved costs are assumed to have actually a straight connection within the appropriate selection of task.

8. The pertinent selection of task is the task level where the firm will earn revenue.

9. Costs will not readjust in full within the relevant array of activity.

10. The high-low approach is offered in classifying a combined price into its variable and also fixed facets.

11. A combined expense has actually both marketing and also governmental cost facets.

12. The fixed price aspect of a mixed expense is the cost of having a business available.

13. For planning objectives, mixed expenses are mostly grouped with resolved prices.

14. The distinction in between the expenses at the high and also low levels of task represents the solved expense element of a mixed price.

15. When applying the high-low approach, the variable price facet of a mixed price is calculated before the fixed cost aspect.

16. An assumption of CVP analysis is that all prices deserve to be classified as either variable or addressed.

17. In CVP evaluation, the term “cost” includes production costs, and also offering and also administrative expenses.

18. Contribution margin is the amount of earnings remaining after deducting expense of items marketed.

19. Unit contribution margin is the amount that each unit offered contributes in the direction of 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 also resolved expenses are contained in calculating the contribution margin.

22. A CVP earnings statement mirrors contribution margin instead of gross profit.

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

24. The break-also suggest is wright here full sales equal full variable costs.

25. The break-even allude is equal to the resolved costs plus net earnings.

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

27. A tarobtain net revenue is calculated by taking actual sales minus the margin of security.

28. Targain net earnings is the income objective for an individual product line.

29. The margin of safety and security is the difference between sales at breakalso and sales at a determined activity level.

30. The margin of security is the difference between contribution margin and also resolved prices.

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

32. The patterns in a lot of providers is to have actually more variable expenses and also fewer addressed expenses.

33. For objectives of CVP evaluation mixed prices should be classified right into their addressed and also variable aspects.


34. The contribution margin proportion of 40% indicates that 60 cents of each sales dollar is obtainable to cover solved prices and to develop a profit.

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

36. If variable expenses per unit are 70% of sales, fixed prices are $290,000 and also tarobtain net earnings is $70,000, compelled sales are $1,200,000.

37. The margin of safety ratio is equal to the margin of security in dollars separated by the actual or (expected) sales.

MULTIPLE CHOICE QUESTIONS

38. For an task base to be advantageous in cost habits evaluation.

a. the task need to always be proclaimed in dollars.

b. there need to be a correlation between transforms in the level of task and also changes in expenses.

c. the task should always be proclaimed in terms of systems.

d. the activity level have to be continuous over a period of time.

39. A variable expense is a expense that

a. varies per unit at eexceptionally level of task.

b. occurs at miscellaneous times throughout the year.

c. varies in complete in propercentage to changes in the level of activity.

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

40. A cost which remains continuous per unit at assorted levels of task is a

a. variable price.

b. addressed cost.

c. mixed cost.

d. manufacturing expense.


41. Two costs at Bradshaw Company type of appear listed below for specific months of procedure.

Month Amount Units Produced

Deliincredibly 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 prices are these?

a. Deliextremely expenses and also utilities are both variable.

b. Deliincredibly costs and utilities are both blended.

c. Utilities are combined and distribution prices are variable.

d. Deliextremely expenses are combined and also utilities are variable.

42. An increase in the level of task will have actually the complying with impacts on unit expenses for variable and resolved costs:

Unit Variable Cost Unit Fixed Cost

a. Increases Decreases

b. Remains constant Remains constant

c. Decreases Remains constant

d. Remains continuous Decreases

43. A resolved cost is a price which

a. varies in complete with changes in the level of activity.

b. stays consistent per unit with changes in the level of task.

c. varies inversely in total through alters in the level of activity.

d. remains consistent in total through alters in the level of task.

44. Fixed expenses usually will not include

a. home taxes.

b. direct labor.

c. supervisory salaries.

d. depreciation on structures and tools.

45. The increased use of automation and also much less use of the occupational pressure in service providers has resulted in a trend in the direction of a rise in

a. both variable and also fixed costs.

b. fixed prices and also a decrease in variable expenses.

c. variable prices and a decrease in addressed prices.

d. variable costs and also no change in addressed costs.

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

a. relate to competitors" costs.

b. relate to basic price level changes.

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

d. respond to changes in the gross national product.

47. Cost habits evaluation uses to

a. retailers.

b. wholesalers.

c. manufacturers.

d. all entities.

48. If a firm rises its task level,

a. costs must remajor the same.

b. most prices will certainly rise.

c. no expenses will certainly remain the exact same.

d. some costs will adjust, others will remajor the very same.

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

a. driver.

b. multiplier.

c. element.

d. correlation.

50. Cost task indexes could aid classify costs as

a. short-term.

b. permanent.

c. variable.

d. transient.

51. Which of the complying with is not a expense classification?

a. Mixed

b. Multiple

c. Variable

d. Fixed

52. If the activity level boosts 10%, total variable costs will

a. reprimary the very same.

b. rise by even more than 10%.

c. decrease by much less than 10%.

d. boost 10%.

53. Which of the complying with expenses 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 2

b. 1 and 4

c. only 1

d. just 2

54. Changes in activity have a(n) _________ result on fixed expenses per unit.

a. positive

b. negative

c. inverse

d. neutral

55. Which of the following is not a solved cost?

a. Direct materials

b. Depreciation

c. Lease charge

d. Property taxes

56. Why is identification of a appropriate array important?

a. It is compelled under GAAP.

b. Cost actions outside of the pertinent selection is not straight, which distorts CVP evaluation.

c. It straight results the variety of units of product a customer buys.

d. It is a expense that is incurred by a firm that have to be accounted for.

57. The pertinent array of activity describes the

a. geographical areas where the firm plans to operate.

b. activity level where all prices are curvidirect.

c. levels of task over which the company expects to operate.

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d. level of task wright here all costs are consistent.

58. Which of the following is not a plausible explanation of why variable prices regularly behave actually in a curvidirect fashion?