Review of Chapter 5 W/ Answers

# Review of Chapter 5 W/ Answers - Chapter 5 Multiple Choice...

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Chapter 5 Multiple Choice Questions 1. As the level of activity increases, how will a mixed cost in total and per unit behave? In Total Per Unit A) Increase Decrease B) Increase Increase C) Increase No effect D) Decrease Increase E) Decrease No effect Answer: A 2. The following data have been collected for four different cost items. Cost Item Cost at 100 units Cost at 140 units W \$8,000 \$10,560 X \$5,000 \$5,000 Y \$6,500 \$9,100 Z \$6,700 \$8,580 Which of the following classifications of these cost items by cost behavior is correct? Cost W Cost X Cost Y Cost Z A) variable fixed mixed variable B) mixed fixed variable mixed C) variable fixed variable variable D) mixed fixed mixed mixed Answer: B 3. In describing the cost formula equation, Y = a + bX, which of the following is correct: A) “Y” is the independent variable. B) “a” is the variable cost per unit. C) “a” and “b” are valid for all levels of activity. D) in the high-low method, “b” equals the change in cost divided by the change in activity. Answer: D 4. The high-low method is used with which of the following types of costs? A) Variable.

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Chapter 5 B) Mixed. C) Fixed. D) Step-variable. Answer: B 5. The contribution approach income statement: A) organizes costs on a functional basis. B) provides owners with more cash flows. C) is particularly helpful to the manager in planning and decision making. D) provides a gross margin figure from which selling and administrative expenses are deducted. E) none of these. Answer: C 6. Anderson Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume.
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## This test prep was uploaded on 04/17/2008 for the course PSYCH 335 taught by Professor Georgewade during the Spring '08 term at UMass (Amherst).

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Review of Chapter 5 W/ Answers - Chapter 5 Multiple Choice...

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