1 If a per unit cost remains constant over a wide range of volume the costs is most likely a variable cost 2 The cost per unit decreases as volume increases for which of the following cost behaviors Fixed costs and mixed costs 3 In the following mixed cost equation what amount represents the total variable cost component y vx f VX 4 Which of the following would generally be considered a committed fixed cost for a retailing firm Lease payments made on the store building 5 f total fixed costs over a period of time v variable cost per unit of activity x volume of activity y total cost Fixed y f mixed y vx f variable y vx 6 Which method is used to see if a relationship between the cost driver and total cost exists Scatter plot 7 Fixed depreciation on equipment used to cut wood enclosures patents on crossover relays internal components quality inspector s salary Variable wood for speaker enclosures crossover relays grill cloth glue 8 When choosing the high point for the high low method how is the high point selected The point with the highest volume of activity is chosen 9 What is the advantage of using regression analysis to determine the cost equation The method is objective all data points are used to calculate the equation for the cost equation it will generally be more accurate then the high low method 10 The following statement is true about using regression analysis the R2 generated by the regression analysis is a measure of how well the regression analysis cost equation fits the data 11 The only difference between variable costing and absorption costing lies in the treatment of fixed manufacturing overhead costs 12 When inventories decline operating income under variable costing is higher than operating income under absorption costing 13 When a company is operating at its breakeven point its total revenues will equal to its total expenses 14 If a company sells one unit above its breakeven sales volume then its operating income would be equal to the unit contribution margin 15 How is the unit sales volume necessary to reach a target profit calculated Fixed expenses target profit unit contribution margin 16 The break even point on a CVP graph is the intersection of the sales revenue line and the total expense line 16 If the sales prices of a product increases while everything else remains the same what happens to the break even point The break even point will decrease 17 Target profit analysis is used to calculate the sales volume that is needed to earn a specific amount of net operating income 18 A shift in the sales mix from a product with a high contribution margin ration towards a product with a low contribution margin ratio will cause the break even point to increase 19 If the degree of the operating leverage is 3 than a 2 change in the number of units sold should result in a 6 change in operating income 20 What is the margin of safety The excess of expected sales over breakeven sales 21 In making short term special decisions you should separate variable from fixed costs 22 When making decisions managers should consider revenues that differ btwn alternatives 23 Sunk Costs are irrelevant to business decisions but variable costs avoidable costs and costs that differ btwn alternatives are 24 Relevant the price of a new printer the trade in value of the older printer the differences btwn cost of toner cartridges Irrelevant the price you paid for the old printer paper costs 25 Swenson s is considering whether it should replace a meat grinder patty shaper machine The new machine will produce 25 more hamburger patties than the old one in the same time this machine is the bottleneck of the hamburger patty process for Swenson s the purchase of the new machine will cause fixed selling costs to Inc but variable selling costs will not be affected The new machine will require installation by a specialty engineering firm Old machine can be sold to overseas needs frequent repairs New machine will need maintenance once a yr be paid for by signing a notes payable at bank Swenson will have to pay interest mthly on note payable for new machine old note payable for old machine paid off in 2 yrs Relevant Fixed selling costs cost of new machine added profits from increase in production from new machine sales value of old machine interest expense on new machine maintenance cost of new machine repairs maintenance costs of old machine installation costs of new machine Not Relevant cost of old machine variable selling costs interest expense on old machine book value of old machine accumulated deprecation on old machine cost per lb of hamburger installation cost of old machine 26 The cost of shipping the order to the customer is relevant to Amazon com s decision to accept a special order at a lower sale price from a large customer in China 27 When companies are price setters their products services tend to be unique 28 When pricing a product or service managers must consider all costs 29 PRICE TAKER companies are price takers when hey have little or no control over the prices of their products or services This occurs when their products services are not unique or when competition is heavy PRICE SETTER companies are price setters when they have more control over pricing in other words they can set the price to some extent The products of price setters are unique which results in less competition Unique products can command higher prices 30 In deciding whether to drop its electronics product line Amazon com would consider revenues it would lose from discontinuing the product line the costs it could save by discontinuing the product line how discontinuing the electronics product line would affect sales of its other products such as mp3s 31 In deciding which product lines to emphasize amazon should focus on the product line that has the highest contribution margin per unit of the constraining factor 32 When making outsourcing decisions the variable cost of producing the product in house is relevant 33 When deciding whether to sell as is or process a product further managers should ignore which of the following the costs of processing the product thus far the cost of processing further the revenue if the product is sold as is the revenue if the product is proces sed further 34 Mixed or Total Costs Variable Costs Fixed Costs Variable costs y vx variable cost per unit x volume Total costs Y vx f Cost Volume Profit CVP analysis is a method of analysis that looks at the relationship between cost volume of