Chapter05 - Chapter 5 Cost Behavior Analysis and Use...

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Chapter 5 Cost Behavior: Analysis and Use Multiple Choice 27. As the level of activity increases, how will a mixed cost in total and per unit behave? A)  A above 28. Since Anytime Pizza is open 24 hours a day, its pizza oven is constantly on and is, therefore, always  using natural gas. However, when there is no pizza in the oven, the oven automatically lowers its flame  and reduces its natural gas usage by 70%. The cost of natural gas would best be described as a: B) mixed cost. 29. When the activity level is expected to decline within the relevant range, what effects would be  anticipated with respect to each of the following? B)  B above 30. Within the relevant range, variable costs can be expected to: A) vary in total in direct proportion to changes in the activity level. 31. Which of the following is not correct when referring to fixed costs? D) Committed fixed costs can often be reduced to zero for short periods of time without seriously  impairing the long-run goals of the company. 32. Which of the following statements is true when referring to fixed costs? D) Discretionary fixed costs can often be reduced to zero for short periods of time without seriously  impairing the long-run goals of the company. 33. For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per unit even  though total costs have remained stable This cost per unit increase may be due to _____________ costs  because the level of activity at Jinan is _______________. A) fixed, decreasing 34. Discretionary fixed costs:  E) none of these. 35. An example of a committed fixed cost is: Brewer, Introduction to Managerial Accounting, 3/e 174
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B) a long-term equipment lease. 36. Which of the following would usually be considered a committed fixed cost for a retail sales  corporation? A) lease payments made on its store buildings  37. Which of the following would usually be considered a discretionary fixed cost for a financial planning company? D) both a and c above 38. Which of the following is unlikely to be classified as a fixed cost with respect to the number of units  produced and sold? D) Production supplies. 39. The following data have been collected for four different cost items. Which of the following classifications of these cost items by cost behavior is correct? B)  B above 40. Which of the following methods of analyzing mixed costs can be used to estimate an equation for the  mixed cost?
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