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ACC 561 Week 4 Quiz

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ACC 561 Week 4 Quiz -

39. A variable cost is a cost that

  • may or may not be incurred, depending on management's discretion.
  • occurs at various times during the year.
  • varies in total in proportion to changes in the level of activity.
  • varies per unit at every level of activity.

42. An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

         Unit Variable Cost               Unit Fixed Cost

  • Increases                           Decreases
  • Remains constant               Remains constant
  • Decreases                          Remains constant
  • Remains constant               Decreases

43. A fixed cost is a cost which

  • remains constant per unit with changes in the level of activity.
  • remains constant in total with changes in the level of activity.
  • varies inversely in total with changes in the level of activity.
  • varies in total with changes in the level of activity.

86. Hollis Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $14 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio?

  • 80%
  • 20%
  • 30%
  • 70%

87.Contribution margin

  • is calculated by subtracting total manufacturing costs per unit from sales revenue per unit.
  • equals sales revenue minus variable costs.
  • is always the same as gross profit margin.
  • excludes variable selling costs from its calculation.

100. The equation which reflects a CVP income statement is

  • Sales + Fixed costs = Variable costs + Net income.
  • Sales – Variable costs + Fixed costs = Net income.
  • Sales – Variable costs – Fixed costs = Net income.
  • Sales = Cost of goods sold + Operating expenses + Net income.

104.A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $150,000. The number of units the company must sell to break even is

  • 50,000 units.
  • 30,000 units.
  • 75,000 units.
  • 300,000 units.

93. Only direct materials, direct labor, and variable manufacturing overhead costs are considered product costs when using

  • variable costing.
  • absorption costing.
  • product costing.
  • full costing.

96. Under absorption costing and variable costing, how are fixed manufacturing costs treated?

           Absorption                 Variable

  • Period Cost               Period Cost
  • Product Cost             Product Cost
  • Period Cost               Product Cost
  • Product Cost             Period Cost

121. Management may be tempted to overproduce when using

  • absorption costing, in order to increase net income.
  • absorption costing, in order to decrease net income.
  • variable costing, in order to increase net income.
  • variable costing, in order to decrease net income.

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