Cost behavior refers to the manner in which: (Points: 5) a cost changes as the related activity changes a cost is allocated to products a cost is used in setting selling prices a cost is estimated 10. Which of the following is NOT an example of a cost that varies in total as the number of units produced changes? (Points: 5) Electricity per KWH to operate factory equipment Direct materials cost Insurance premiums on factory building Wages of assembly worker 11. A cost that has characteristics of both a variable cost and a fixed cost is called a: (Points: 5) variable/fixed cost mixed cost discretionary cost sunk cost 12. Given the following cost and activity observations for Wondrous Company’s utilities, use
the high-low method to calculate Wondrous’ variable utilities costs per machine hour. Cost Machine Hours March $3,100 15,000 April 2,700 10,000 May 2,900 12,000 June 3,500 18,000 (Points: 5) $10.00 $.67 $.63 $.10 = ($3,500-$2,700) / (18,000 – 10,000) = $0.1 13. As production increases, what would you expect to happen to fixed cost per unit? (Points: 5) Increase Decrease Remain the same Either increase or decrease, depending on the variable costs
14. Contribution margin is: (Points: 5) the excess of sales revenue over variable cost another term for volume in the "cost-volume-profit" analysis profit the same as sales revenue 15. If sales are $820,000, variable costs are 62% of sales, and operating income is $260,000, what is the contribution margin ratio?
- Fall '14
- Contribution Margin, Zins