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Acct 004-n7337 Chapter 5 Exam

Salaries of sales personnel who are paid on a commission only basis are which type of cost?

a.            Fixed                                                                                                                                                                

b.            Variable

c.             Mixed

d.            Step-wise

e.            None of the above


 

Question 12

 Fixed costs, on a per-unit basis, have a directly proportional relationship with changes in sales or production.

a.            True

b.            False


 

Question 13

 A company currently has fixed cost of $770,500, which will increase by $103,500 if the company expands its production facilities. Currently, it sells its product for $47. The product has a variable cost per unit of $24. How many more units must the company sell to break even, at the current sales price per unit, than it did to break even prior to the increase in fixed cost?

a.            3,500

b.            4,000

c.             4,500

d.            5,000

e.            6,000

 

Question 14

 Variable costs (on a per-unit basis) remain constant in proportion to changes in volume.

a.            True

b.            False


 

Question 15

 A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart.

a.            True

b.            False


 

Question 16

 Which of the following is true about contribution margin income statements?

a.            It is also referred to as a variable costing income statement.

b.            It takes components of a traditional income statement and splits them up into variable and fixed components.

c.             It can help management make decisions regarding such issues as short term pricing.

d.            All of the above

e.            None of the above.

 

Question 17

 Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

a.            True

b.            False

 

Question 18

 To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

a.            True

b.            False


 

Question 19

 A company with current sales of $730,000 and a break-even point of $750,000 has a $20,000 margin of safety.

a.            True

b.            False


 

Question 20

 Which of the following is true about variable costs?

a.            Variable costs are constant in total even when activity levels change.

b.            Variable costs are fixed in total but vary on a per unit basis.

c.             Variable costs on a per-unit basis have an inverse relationship.

d.            Variable costs vary in total but are fixed per unit.

e.            All of the above.


 

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