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Quiz – Chapter 3
1. If the level of activity increases within the relevant range:
A) variable cost per unit and total fixed costs also increase.
B) fixed cost per unit and total variable cost also increase.
C) total cost will increase and fixed cost per unit will decrease.
D) variable cost per unit and total cost also increase.
2. In describing the cost equation, Y = a + bX, "a" is:
A) the dependent variable, cost.
B) the independent variable, the level of activity.
C) the total fixed costs.
D) the variable cost per unit of activity.
3. Quartz Manufacturing Company has developed the following overhead cost formulas:
Overhead Cost
Cost Formulas
Insurance .
.............................
$400
Depreciation.
........................
$900
Maintenance materials .
........
$0.15 per machine hour
Utilities.
................................
$600 plus $0.20 per machine hour
Based on these cost formulas, the total overhead cost expected for Quartz Manufacturing
Company if 1,500 hours are worked is:
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 Spring '08
 Saouma
 ........., C D B B C C B

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