Chapter 18 Flashcards
_________ costs remain constant in amount when the volume of activity varies from period to period within a relevant range
Fixed
The rent of a building remaining constant no matter the hours of operation is an example of a _________ cost.
fixed
Depreciation, property taxes, office salaries, and other department costs are _______ costs.
fixed
Fixed cost per unit of output ___________ (increases/decreases) as volume increases.
decreases
If the unit increases, the cost per unit __________ (increases/decreases).
decreases
_________ costs change in proportion to changes in volume of activity.
variable
The variable cost per unit __________ (increases, decreases, remains constant), but the total amount of variable cost changes with the level of production.
remains constant
Sales commissions, shipping costs, and overhead costs are examples of _________ costs.
variable
_________ costs include both fixed and variable components.
Mixed
A fixed monthly salary and a variable commission on sales is an example of a _________ cost.
mixed
A mixed cost is _________ (greater than, less than, equal to) zero when volume is zero.
greater than
As the activity level increases, the mixed cost line increases at an amount __________ (greater than, less than, equal to) the variable cost per unit.
equal to
A way to estimate the cost equation by graphically connecting the two cost amounts at the highest and lowest unit volumes
High-low method
What is the high-low method formula?
Change in cost / Change in units
How is change in cost calculated in the high-low method?
High minus Low cost divided by high minus low units
