# Score 100 Three Most Common Cost Behavior Classifications Are Fixed Costs Variable Costs And

## 1. The three most common cost behavior classifications are:

A. fixed costs, variable costs, and mixed costs.

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B. variable costs, product costs, and sunk costs.

C. variable costs, sunk costs, and opportunity costs.

D. variable costs, period costs, and differential costs.

Answer; a. fixed costs, variable costs, and mixed costs.

## 2. Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of \$86,625. In its slowest month, the company made 1,800 desks at a cost of \$49,500. Using the high-low method of cost estimation, total fixed costs are:

A. \$61,875

B. \$33,875

C. \$24,750

D. cannot be determined from the data given

## 3. If fixed costs increased and variable costs per unit decreased, the break-even point would:

A. decrease.

B. remain the same.

C. increase.

D. cannot be determined from the data provided

35%

28%

65%

72%

## 5. Which of the following conditions would cause the break-even point to decrease?

a. Unit variable cost increases

b. Unit selling price decreases

c. Total fixed costs increase

d. Unit variable cost decreases

## 6. In cost-volume-profit analysis, all costs are classified into the following two categories:

a. variable costs and fixed costs

b. mixed costs and variable costs

c. sunk costs and fixed costs

d. discretionary costs and sunk costs

## 7. Zeke Company sells 25,000 units at \$21 per unit. Variable costs are \$10 per unit, and fixed costs are \$75,000. The contribution margin ratio and the unit contribution margin are:

a. 47% and \$11 per unit.

b. 52% and \$11 per unit.

c. 47% and \$8 per unit.

d. 53% and \$7 per unit

a. Graph 2

b. Graph 4

c. Graph 1

d. Graph 3

## 9. Contribution margin is:

a. the same as sales revenue.

b. another term for volume in the “cost-volume-profit” analysis.

c. the excess of sales revenue over variable cost.

d. profit.

## 10. Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

a. expected to increase by 3%

b. unaffected

c. expected to increase by 4 %

d. expected to increase by 48%

81%

32%

49%

51%

## 12. Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average variable cost?

a. \$ 70

b. \$ 64

c. \$140

d. \$ 60

73 units

5,744 units

2,098 units

4,825 units

## 14. Which of the following is an example of a cost that varies in total as the number of units produced changes?

a. Straight-line depreciation on factory equipment

b. Direct materials cost

c. Salary of a production supervisor

d. Property taxes on factory buildings

## 15. Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average unit selling price?

a. \$200

b. \$100

c. \$ 88

d. \$ 80

\$39,935

\$44,824

\$84,759

\$13,585

## 17. The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:

a. budgetary analysis.

b. gross profit analysis.

c. contribution margin analysis.

d. cost-volume-profit analysis.

## 18. If sales are \$500,000, variable costs are 75% of sales, and operating income is \$40,000, what is the operating leverage?

a. 3.1

b. 1.3

c. 1.25

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