ACCT test 2

Total fixed costs -blank- over various levels of activities, whereas total variable costs -blank- directly and -blank- with changes in the activity level

Are constant Vary Are proportionately

The CVP income statement classified costs

As variable or fixed and computes contribution margin

The -blank- income statement classifies cost as variable or fixed and computes a contribution margin

CVP

-blank- is the amount of revenue that remains after deducting variable costs in a CVP income statement

Contribution margin

The contribution margin ratio is

Contribution margin divided by sales dollars

Margin of safety in dollars is

Expected sales dollars less break-even sales dollard

Changes in activity level have an -blank- effect on fixed costs per unit

Inverse

Which one of the following describes the break-even point

It is the point where total sales equals total variable costs plus total fixed costs.

The margin of safety ratio is

Margin of safety in $ divided by expected sales

A cost that has both variable and fixed components is referred to as a -blank- cost

Mixed

Delivery costs are -blank- cost Utilities costs are -blank-

Mixed Variable

Cost behavior analysis is the determination of how a firm's costs

Respond to changes in the level of business activity

Which one of the following is the format of a CVP income statement

Sales − Variable costs − Fixed costs = Net income.

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

Unit Variable Cost: Remains constant Unit Fixed Cost: Decreases

A -blank- cost remains constant per unit at every level of activity

Variable

What type of cost remains the same pre unit at every level of activity?

Variable cost

a cost that remains constant, in total, regardless of changes in the level of activity

Variable cost

Unit fixed costs -blank- with the charges in the level of activity

Vary inversely

Which statement is described as a fixed cost?

When activity declines, it's cost per unit increases

Fixed costs generally do not include

direct labor

Which of the following is not a fixed cost

direct materials

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

fixed costs and a decrease in variable costs

If the activity level increases 10%, total variable costs will

increase by 10%

The activity that causes changes in the behavior of costs is referred to as the activity

index

Costs that change in total but not proportionately with changes in the activity level are

mixed costs

Which of the following is not a cost classification

multiple

A fixed cost is a cost which

remains constant in total with changes in the level of activity

If a firm increases its activity level,

some costs will change while others will remain constant

The relevant range is

the range over which a company expects to operate during a year

For an activity base to be useful in cost behavior analysis,

there should be a correlation between changes in the level of activity and changes in costs.

An example of a mixed cost is

utility costs

Mixed costs consist of a

variable cost element and a fixed cost element. Mixed costs consist of a variable cost element and a fixed cost element.

Contribution margin is the amount of revenue remaining after deducting

variable costs

A variable cost is a cost that

varies in total in proportion to changes in the level of activity

Variable costs are costs that

vary in total directly and proportionately with changes in the activity level and remain the same per unit at every activity level