# 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

**Answer; ***C. $24,750 *

## 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

**Answer; ***C. increase. *

## 4. If sales are $808,258, variable costs are 65% of sales, and operating income is $222,866, what is the contribution margin ratio?

Select the correct answer.

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

## 8. Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

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%

## 11. If sales are $861,399, variable costs are $421,360, and operating income is $276,326, what is the contribution margin ratio?

Select the correct answer.

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

## 13. If fixed costs are $241,258, the unit selling price is $115, and the unit variable costs are $73, what is the break-even sales (units)?

Select the correct answer.

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

## 16. Ingram Co. manufactures office furniture. During the most productive month of the year, 3,271 desks were manufactured at a total cost of $84,759. In its slowest month, the company made 1,211 desks at a cost of $39,935. Using the high-low method of cost estimation determine total fixed costs are.

Select the correct answer.

$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

d. 0

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