A cost which varies in direct proportion to a change in an activity base, but is fixed per unit, is known as a:

fixed cost   Incorrect or    variable costCorrect

 

Fixed costs are assumed to be constant:

at any level of production   Incorrect or    over the relevant rangeCorrect

 

Costs like supervisory salary, office space, and so forth, which increase in chunks are called:

mixed costs   Incorrect or    step costs Correct

 

A statistical technique that relies on mathematical formulas to separate a cost between its fixed and variable components is called:

the method of least squares   Correct or    scattergraphIncorrect

 

The method of separating costs between fixed and variable components which relies on only two data points for analysis is called the:

high-low method    Correct or    mixed-cost methodIncorrect

 

The high-low method and scattergraph method will achieve the same results.

true   Incorrect or    falseCorrect

 

The break-even point in units can be determined by dividing fixed costs by the:

unit contribution margin   Correct or    contribution margin ratioIncorrect

 

On a break-even graph with dollars on the vertical axis and sales volume on the horizontal axis, fixed costs would appear as a straight line parallel to the:

vertical axis    Incorrect or    horizontal axisCorrect

 

The contribution margin equals the selling price per unit minus the fixed cost per unit.

true   Incorrect or   falseCorrect

 

The contribution margin can be defined as the amount that an additional unit of sales contributes towards covering fixed costs and generating income.

true    Correct or    falseIncorrect

 

In computing the sales volume necessary to achieve a target income, target income is treated the same as a:

fixed cost   Correct or    variable costIncorrect

 

In considering the impact of operating changes on CVP analysis, any change to any component in the CVP model will require a complete revision of all elements included in the original CVP analysis.

true    Incorrect or   falseCorrect

 

For a multi-product firm, the break-even point computation begins with a computation of the:

weighted contribution margin    Correct or   weighted fixed costsIncorrect

 

With a multi-product firm the break-even units refer to the sum of:

the unit sales for each product    Incorrect or    a combination of the individual products in the same proportion as the predicted sales mixCorrect

 

A limiting assumption of cost-volume-profit analysis is that costs can be classified as fixed or variable.

true    Correct or    falseIncorrect

 

Correct cost-volume-profit analysis depends on the assumption that inventory levels:

increase from period to period    Incorrect or  remain fairly stableCorrect