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ACC 561 Week 4 Quiz -
39. A variable cost is a cost that
- may or may not be incurred, depending on management's discretion.
- occurs at various times during the year.
- varies in total in proportion to changes in the level of activity.
- varies per unit at every level of activity.
42. An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:
Unit Variable Cost Unit Fixed Cost
- Increases Decreases
- Remains constant Remains constant
- Decreases Remains constant
- Remains constant Decreases
43. A fixed cost is a cost which
- remains constant per unit with changes in the level of activity.
- remains constant in total with changes in the level of activity.
- varies inversely in total with changes in the level of activity.
- varies in total with changes in the level of activity.
86. Hollis Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $14 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio?
- is calculated by subtracting total manufacturing costs per unit from sales revenue per unit.
- equals sales revenue minus variable costs.
- is always the same as gross profit margin.
- excludes variable selling costs from its calculation.
100. The equation which reflects a CVP income statement is
- Sales + Fixed costs = Variable costs + Net income.
- Sales – Variable costs + Fixed costs = Net income.
- Sales – Variable costs – Fixed costs = Net income.
- Sales = Cost of goods sold + Operating expenses + Net income.
104.A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $150,000. The number of units the company must sell to break even is
- 50,000 units.
- 30,000 units.
- 75,000 units.
- 300,000 units.
93. Only direct materials, direct labor, and variable manufacturing overhead costs are considered product costs when using
- variable costing.
- absorption costing.
- product costing.
- full costing.
96. Under absorption costing and variable costing, how are fixed manufacturing costs treated?
- Period Cost Period Cost
- Product Cost Product Cost
- Period Cost Product Cost
- Product Cost Period Cost
121. Management may be tempted to overproduce when using
- absorption costing, in order to increase net income.
- absorption costing, in order to decrease net income.
- variable costing, in order to increase net income.
- variable costing, in order to decrease net income.