Chapter 11 - Cost Behavior And CVP Analysis

Question 1

Which of the following items is not a key factor involved in cost volume profit (C-V-P) analysis?
- fixed and variable will cost
- Time value of money
- the mix of product sold
- Sales revenue

Answer 1

Time value of money

Question 2

CVP analysis is useful to managers in:
- controlling decisions
- evaluating decisions
- all of these are correct
- planning

Answer 2

All of these are correct

Question 3

What is CVP primarily used for?
- controlling decisions
- planning
- financing decisions
- evaluating decisions

Answer 3

Planning

Question 4

Assume that Upward Company has total variable costs of $90,000 when 30,000 units are sold. If 40,000 units were sold, total variable costs would be:
- $150,000
- $130,000
- $100,000
- $120,000

Answer 4

$120,000

$90,000 / 30,000 units = $3 per unit

Total Variable costs: 40,000 units x $3 = $120,000

Question 5

Assume that upward company has total variable cost of $90,000 when 30,000 units are sold. If 40,000 units were sold, total variable cost would be:
- 150,000
- 130,000
- 100,000
- 120,000

Answer 5

$120,000

Variable costs per unit: $90,000 / 30,000 units = $3 per unit

Total variable costs: 40,000 x $3 = $120,000

Question 6

All of the following are comments, cost behavior patterns, except:
- variable cost
- mixed cost
- Manufacturing cost
- fixed cost

Answer 6

Manufacturing cost

Question 7

Cost that contain both fixed and variable components:
- variable cost
- Mixed cost
- fixed cost
- All of these are correct

Answer 7

Mixed costs

Question 8

Which of the following types of cars always change in total in proportion to changes in the level of activity of a firm?
- fixed cost
- variable cost
- relevant cost
- opportunity cost

Answer 8

Variance cost

Question 9

Fixed costs per unit:
- remain constant as activity levels increase
- increase as activity levels increase
- decrease as activity levels increase
- none of these are correct

Answer 9

Decreased as activity levels increase