Test 2- Spring 2011 Sample questions:
Within the relevant range, as the number of units produced increases:
A) variable costs increase in total.
B) the variable cost per unit remains the same.
C) fixed costs in total remain the same.
D) all of the above.
E) none of the above
The high-low method is generally more accurate than the least-squares regression
method in analyzing cost behavior?
A is a fixed cost; B is a variable cost.
During the current year the level of activity has
decreased but is still within the relevant range.
We would expect that:
A) The cost per unit of B to remain unchanged
B) The cost per unit of A has decreased
C) The cost per unit of A has remained unchanged
D) The cost per unit of B has decreased
Utility costs at Service, Inc. are a mixture of fixed and variable components.
indicate that utility costs are an average of $0.33 per hour at an activity level of 6,620
machine hours and $0.25 per hour at an activity level of 14,770 machine hours.
Assuming that this activity is within the relevant range, what is the expected total utility
cost of the company works 10,000 machine hours?
5. Farah Corporation has provided the following information and total cost data for two
levels of monthly production volume.
The company produces a single product.
Production volume (units)
The best estimate of the total cost to manufacture 1,920 units is closest to: