Variable, Fixed, and Mixed Costs

Question 1

What are variable costs?

Answer 1

Costs that change in direct proportion to the level of production or sales.

Question 2

True or False: Fixed costs remain constant regardless of production volume.

Answer 2

True

Question 3

Fill in the blank: ______ costs are incurred regardless of the level of production or sales.

Answer 3

Fixed

Question 4

Which of the following is an example of a variable cost? A) Rent B) Direct materials C) Salaries

Answer 4

B) Direct materials

Question 5

What are mixed costs?

Answer 5

Costs that contain both fixed and variable components.

Question 6

Short Answer: How do variable costs behave as production increases?

Answer 6

They increase.

Question 7

True or False: Mixed costs can be separated into fixed and variable components.

Answer 7

True

Question 8

Multiple Choice: Which of the following is NOT a characteristic of fixed costs? A) They do not change with production levels B) They vary with sales volume C) They remain constant over a relevant range

Answer 8

B) They vary with sales volume

Question 9

What is the main distinction between variable costs and fixed costs?

Answer 9

Variable costs change with production levels, while fixed costs remain constant.

Question 10

Fill in the blank: An example of a mixed cost is ______.

Answer 10

utility expense