Managerial Accounting, 4e (Whitecotton) Chapter 5 Cost Behavior true or false
A fixed cost will stay constant on a per unit basis as the volume increases.
FALSE
Contribution margin plus variable cost per unit equals total sales revenue.
FALSE
Firms may choose to use absorption costing or variable costing for external financial reporting purposes.
FALSE
Full absorption costing divides fixed overhead between Cost of Goods Sold and period expenses.
FALSE
R-square tells managers how much of the variability in activity is caused by variability in cost.
FALSE
Step costs are fixed over some range of activity and then increase like a variable cost.
FALSE
The contribution margin income statement is appropriate for external users.
FALSE
The high-low method requires three observations of costs to calculate the cost formula.
FALSE
The unit contribution margin tells how much each additional unit sold will contribute to covering variable costs.
FALSE
A scattergraph is useful in recognizing unusual patterns in the cost data.
TRUE
A variable cost increases in total as the volume increases.
TRUE
Contribution margin is defined as sales revenue less variable costs.
TRUE
The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.
TRUE
The least-squares regression method uses all of the available data to find the best fitting line.
TRUE
Variable costing uses a contribution margin income statement.
TRUE