1. variable cost 1. cost-volume-profit 1. c. Fixed costs are costs that do not change when the activity base fluctuates. Variable costs vary in direct proportion to a change in an activity base. Discretionary costs are costs
which can be avoided. Discretionary costs are typically fixed in nature. Mixed costs are those costs which contain both variable and fixed elements. Mixed costs change in response to fluctuations in the activity base; however, the change is not directly proportional because of the presence of a constant fixed charge. 2. d. The phone bill would be a mixed cost because it includes a base or fixed amount plus a variable component. Variable costs vary in direct proportion to changes in the
activity base. Fixed costs do not vary with the change in activity base. Fixed costs may be committed or discretionary. Committed costs are not easily changed. Discretionary costs can be avoided over time. 3. d. The per-unit fixed cost would decline as production increased. That is, total production divided into the constant fixed cost amount would result in a decreasing per unit fixed cost. A line sloping downward to the right would represent this situation. 4. b. Committed costs
arise from an organization’s commitment to engage in operation and are governed mainly by past decisions that establish the present levels of capacity. 5. a. $114,000. Using the high-low method, the difference between the highest and lowest activity levels was 7,500 hours (20,000 minus 12,500). The difference in cost was $60,000 ($274,000 minus $214,000). These computations reveal a variable per-hour cost of $8.00 ($60,000 divided by 7,500 hours). At 20,000 direct labor hours total
variable costs would amount to $160,000 (20,000 hours times $8.00 per hour), leaving fixed costs of $114,000 ($274,000 minus $160,000). During the slowest month, fixed costs would also be computed to be $114,000. Therefore, during July the expectation continues at $114,000 for fixed costs. 6. b. $2.00. The income plus the fixed costs incurred equals the contribution margin ($90,000 plus $20,000 equals $110,000). Therefore, total variable costs must have been $40,000 ($150,000 in sales
minus $110,000 contribution margin equals $40,000 variable costs). If 20,000 units produced $40,000 of variable costs, then the per-unit variable cost must have been $2.00. 7. c. $1,750. The sales price per unit was $5,750 ($460,000 divided by 80 units). The variable cost per unit was $4,000. Contribution margin per unit was $1,750 ($5,750 minus $4,000). 8. c. $2,500,000. The contribution margin per unit is $1,000 ($2,500 sales price minus $1,500 variable cost). Dividing the
$1,000,000 fixed cost by the $1,000 per-unit contribution margin yields required sales in units of 1,000. At $2,500 per unit, the 1,000 units sold would generate $2,500,000 of total sales. 9. c. $1,000,000. The total fixed cost of $540,000 must be divided by the weighted average contribution margin ratio. The contribution margin ratio for carpet is 60% of sales (1 minus .4) and the contribution margin ratio for padding is 50% of sales. The weighted average contribution margin ratio is 54%
((.4 times .6) plus (.6 times .5)). The $540,000 fixed cost divided by the .54 weighted average contribution margin ratio yields total sales in dollars of $1,000,000. 10. b. An increase in fixed cost with no change in variable cost would increase the number of units which must be produced and sold to achieve the break-even point. Changes in sales volume and production volume would not affect the break-even point. Principlesofaccounting.com ™ Copyright © 2022. All rights reserved. Asked by Nội dung chính Show 1. Variable costs are costs that vary in total in direct proportion to changes in the activity level.TrueFalse 2. Variable costs are costs that vary on a per-unit basis with changes in the activity level. True False 3. Direct materials and direct labor costs are examples of variable costs of production. True False 4. Total variable costs change as the level of activity changes. True False 5. Unit variable cost does not change as the number of units of activity changes. True False 6. A mixed cost has characteristics of both variable and fixed costs. True False 7. Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours are an example of a fixed cost. True False 8. If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%. True False 9. If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%. True False 10. The dollars available from each unit of sales to cover fixed cost and profit are the unit variable cost. True False 11. If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease. True False 12. If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point. True False 13. If the property tax rates are increased, this change in fixed costs will result in a decrease in the break-even point. True False 14. Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the profit-volume chart. True False 15. Even if a business sells six products, it is possible to estimate the break-even point. True False 16. The adoption of variable costing for managerial decision making is based on the premise that fixed factory overhead costs are related to productive capacity of the manufacturing plant and are normally not affected by the number of units produced. True False 17. Assuming no other changes, operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold. True False 18. Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost? Image transcription text Graph 1 Graph 2 Total units produced Total units produced Graph 3 Graph 4 Total units produced Total units produced Figure 21-1 ... Show morea. Graph 4 b. Graph 3 c. Graph 2 d. Graph 1 19. In an absorption costing income statement, the manufacturing margin is the excess of sales over the variable cost of goods sold. True False 20. If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%. True False 21. A low operating leverage is normal for highly automated industries. True False 22. Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service? a. number of trucks in service b. total miles driven c. number of packages picked up d. number of truck drivers 23. Which of the following activity bases would be the most appropriate for food costs of a hospital? a. number of MRIs taken b. quantity of prescriptions filled c. number of patients who stay in the hospital d. number of nurses scheduled to work 24. Costs that vary in total in direct proportion to changes in an activity level are called a. sunk costs b. differential costs c. variable costs d. fixed costs 25. Which of the following describes the behavior of a variable cost per unit? a. varies in direct proportion with the activity level b. remains constant with changes in the activity level c. varies in decreasing proportion with changes in the activity level d. varies in increasing proportion with changes in the activity level 26. The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called zero-based budgeting. True False 27. The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called continuous budgeting. True False 28. Budgets are prepared in the Accounting Department and monitored by various department managers. True False 29. Once a static budget has been determined, it is changed regularly as the underlying activity changes. True False 30. Flexible budgeting requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time. True False 31. The first budget to be prepared is usually the sales budget. True False 32. The master budget of a small manufacturer would normally include all component budgets that impact on the financial statements. True False 33. The master budget of a small manufacturer would normally include all necessary component budgets except the budgeted balance sheet. True False 34. The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget. True False 35. The first budget to be prepared is usually the production budget. True False 36. If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 198,000 units. True False 37. If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 202,000 units. True False 38. The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory. True False 39. The budgeted volume of production is based on the sum of (1) the expected sales volume and (2) the desired ending inventory, less (3) the estimated beginning inventory. True False 40. After the sales budget is prepared, the capital expenditures budget is normally prepared next. True False 41. The cash budget presents the expected inflow and outflow of cash for a specified period of time. True False 42. The cash budget is affected by the sales budget, the various budgets for manufacturing costs and operating expenses, and the capital expenditures budget. True False 43. The cash budget summarizes future plans for acquisition of fixed assets. True False 44. The capital expenditures budget details future plans for acquisition of fixed assets. True False 45. When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing a. padding b. budgetary slack c. cushions d. goal conflict 46. Budgeting supports the planning process by encouraging all of the following activities except a. requiring all organizational units to establish their goals for the upcoming period b. improving overall decision making by considering all viewpoints, options, and cost-reduction possibilities c. directing and coordinating operations during the period d. increasing the motivation of managers and employees by providing agreed-upon expectations 47. The budget process involves doing all of the following except a. periodically comparing actual results with the goals b. executing plans to achieve the goals c. establishing specific goals d. dismissing all managers who fail to achieve operational goals specified in the budget 48. A formal written statement of management's plans for the future, expressed in financial terms, is a a. budget b. gross profit report c. responsibility report d. performance report 49. The capital expenditures budget is part of the planned investing activities of a company. True False 50. Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem? a. allowing employees the opportunity to be a part of the budget process b. setting goals among managers that conflict with one another c. allowing goals to be so low that employees develop a "spend it or lose it" attitude d. setting goals too tightly making it difficult to meet performance expectations Answer & Explanation Solved by verified expert Answered by lestie c Donec al gue vel dictum v ongue ve sus ant molestie ac, dict inia pul cing elit dictum vi onec aliq usce dui ultrices m ipsum ultrices onec aliq ipiscing elit. lestie con a. Fusce d inia pulvi Donec aliquet. Lorem Unlock full access to Course Hero Explore over 16 million step-by-step answers from our library Subscribe to view answer Step-by-step explanation molestie consequat, ultric cing elit. Nam lacinia pulvinar tortor nec facilisi lestie consequat, ult iscing elit. Nam lacinia pulvinar tortor nec facilisis. Pe s ante, d ng elit. N sque dapi a molestie onec aliqu risus an risus ant consectetu , dictum usce dui l m ipsum do , dictum ng elit. N Donec al m ipsum do m ipsum Donec al tesque dap ac, dictu sus ante, dapibus a mol gue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ips , dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. ia pulvinar t ultrices risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus at, ulia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam sum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellente nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. L xentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fuscipsum dolorlestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolo lestieat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ctum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur sussum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facipiscing elit. Na amet, cipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie lestim risus ante, dapibus a molestie coie vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellente risusia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec iturm risus ante, dapibus a molestie consequat, ultrices ac magna. cece dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. ec fat, ultrices ac magna. Fusce dui lectus, congueec ftrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consect faa. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Do icitur lrem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. P trices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Don iniaitur laoreet. Nam risus ante, dapibusec aliquet. Lorem ipec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus Which costs are in direct proportion to the level of production activity?Variable costs are directly proportional to the level of production. If zero output is being produced then these costs do not have to be incurred. These costs vary with the level of output produced. Wages paid to the factory labour is an example of the same. Which type of cost changes in total in direct proportion to changes in activity level multiple choice question differential variable fixed opportunity?Answer and Explanation: A cost that changes in proportion to changes in volume of activity is called c) a variable cost. Which cost changes with the level of activity?Variable costs have two main characteristics: (a) The total cost varies in proportion to changes in the level of activity (b) The cost per unit remains constant, regardless of the activity level. Which costs changes in direct proportion to a change in volume?Answer and Explanation: A cost that changes in proportion to changes in volume of activity is called c) a variable cost. Variable costs are those tied directly to production and rise and fall depending on what work a business does.
Which of the following costs changes in total in direct proportion to a change in the activity level?Option (A) Variable cost is the correct answer .
As the level of the production activity changes (increases or decreases), the variable cost will also increase or decrease. Examples of variable costs include the cost of raw materials in production, direct labor, utility cost, and sales commission.
What type of costs change in proportion to the volume?Variable costs change in proportion to the quantity of output. As production quantity increases, the cost increases; as production quantity decreases, so do the costs. Most accounting textbooks depict variable costs as varying directly with volume.
Which of the following costs change in direct proportion to a change in the activity level as volume goes up costs go up at the same rate of change )?Variable costs are expenses that change directly and proportionally to the changes in business activity level or volume. Even if the output is nil, fixed costs are incurred.
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Which of the following costs change in total in direct proportion to a change in volume
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