Module 3

the variable cost per unit using the high low method

1.10

If the unit sales price is $12, the unit variable costs $7, and fixed costs are $360,000. How many units must be sold to earn a profit of $39,000? a. 51000 b. 79800 c. 127500 d. 91500

79800

T or F: The difference between expected sales and break-even sales is called margin of safety.

True

__________________________ are costs that management cannot easily change in the short-term without affecting short-run profits. a. committed fixed costs b. discretionary fixed costs c. mixed costs d. opportunity costs

committed fixed costs

A factor that limits the level of production is called a a. constraint b. restraint c. limitation d. restriction

constraint

To calculate the sales dollars necessary to achieve a desired profit level, the sum of fixed costs plus desired profit is divided by: a. contribution margin b. weighted average unit contribution margin c. contribution margin ration d. unit sales price minus unit constribution margin

contribution margin ratio

Which of the following statements about the relevant range is true? a. cost functions outside the relevant range are usually linear b. the relevant range is the normal length of time in a companys accounting period c. estimates outside the relevant range are useful d. cost functions within the relevant range are assumed to be linear

cost functions within the relevant range are assumed to be linear

T or F: The P-value is a statistical measure of how well the regression line fits the data. It measures the percentage of variance in the dependent variable (cost) explained by the independent variable (activity).

false

What type of cost is rent

fixed cost

Which of the following is a graphical method that visually fits a line through the sample data to develop a cost equation using the vertical and horizontal axis and is useful in detecting outliers? a. account analysis b. what if analysis c. scattergraph approach d. contribution margin

scattergraph