ACCT2302_E2-K - ACCT 2302 Exam 2 Chapter 5-9 1. As the...

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ACCT 2302 Exam 2 Chapter 5-9 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 Level: Hard LO: 1 2.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: A) fixed cost. B) mixed cost. C) step-variable cost. D) true variable cost. Answer: B Level: Easy LO: 1 3.When the activity level is expected to decline within the relevant range, what effects would be anticipated with respect to each of the following? Fixed costs per unit Variable costs per unit A) Increase Increase B) Increase No change C) No change No change D) No change Increase Answer: B Level: Medium LO: 1 Source: CPA, adapted 4.Within the relevant range, variable costs can be expected to: A) vary in total in direct proportion to changes in the activity level. B) remain constant in total as the activity level changes. C) increase on a per unit basis as the activity level increases. D) increase on a per unit basis as the activity level decreases. E) none of these. Answer: A Level: Easy LO: 1 5.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 B) fixed, increasing C) variable, decreasing D) Variable, increasing Answer: A Level: Medium LO: 1 1 Ercan Sinmaz
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ACCT 2302 Exam 2 Chapter 5-9 6.Which of the following is unlikely to be classified as a fixed cost with respect to the number of units produced and sold? A) Property taxes on a headquarters building. B) Legal department salaries. C) Cost of leasing the company's mainframe computer. D) Production supplies. Answer: D Level: Easy LO: 1 7.Which of the following methods of analyzing mixed costs can be used to estimate an equation for the mixed cost? Least- High-Low Squares A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Level: Easy LO: 2,5 8.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 Level: Medium LO: 3 9.The high-low method is used with which of the following types of costs?
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ACCT2302_E2-K - ACCT 2302 Exam 2 Chapter 5-9 1. As the...

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