Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Chapter 2, Problem 10MC
Variable costs are expenses that ____________________________ .
- remain constant on a per-unit basis but change in total based on activity level
- remain constant on a per-unit basis and remain constant in total regardless of activity level
- decrease on a per-unit basis as activity level increases
- remain constant in total regardless of activity level within a relevant range
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Variable costs are expenses that ________.
a.remain constant on a per-unit basis but change in total based on activity level
b.remain constant on a per-unit basis and remain constant in total regardless of activity level
c.remain constant in total regardless of activity level within a relevant range
d.decrease on a per-unit basis as activity level increases
Which of the following describes the behavior of the variable cost per unit?
Remains constant with changes in the activity level
Varies in decreasing proportion with changes in the activity level
Varies in increasing proportion with changes in the activity level
Varies in direct proportion with the activity level
Which of the following statements describes variable costs?A. Costs that vary on a per-unit basis as the level of activity changesB. Costs that vary in total in direct proportion to changes in the level of activityC. Costs that remain the same in total dollar amount as the level of activity changesD. Costs that vary on a per-unit basis, but remain the same in total as the level of activity changes
Chapter 2 Solutions
Principles of Accounting Volume 2
Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following represents the components...Ch. 2 - Which of the following represents the components...Ch. 2 - Which of the following represents the components...Ch. 2 - Conversion costs include all of the following...Ch. 2 - Which of the following is not considered a product...Ch. 2 - Fixed costs are expenses that...Ch. 2 - Variable costs are expenses that...
Ch. 2 - Total costs for ABC Distributing are $250,000 when...Ch. 2 - Which of the following would not be classified as...Ch. 2 - Which of the following are prime costs? A....Ch. 2 - Which of the following statements is true...Ch. 2 - The high-low method and least-squares regression...Ch. 2 - Which of the following methods of cost estimation...Ch. 2 - In the cost equation Y=a+bx, Y represents which of...Ch. 2 - A scatter graph is used to test the assumption...Ch. 2 - Identify the three primary classifications of...Ch. 2 - Explain how the income statement of a...Ch. 2 - Walsh & Coggins, a professional accounting firm,...Ch. 2 - Lizzys is a retail clothing store, specializing in...Ch. 2 - Identify and describe the three types of product...Ch. 2 - Explain the difference between a period cost and a...Ch. 2 - Explain the concept of relevant range and how it...Ch. 2 - Explain the differences among fixed costs,...Ch. 2 - Explain the difference between prime costs and...Ch. 2 - Explain how a scatter graph is used to identify...Ch. 2 - Explain the components of the total cost equation...Ch. 2 - Explain how the high-low method is used for cost...Ch. 2 - Magio Company manufactures kitchen equipment used...Ch. 2 - Park and West, LLC, provides consulting services...Ch. 2 - Canine Couture is a specialty dog clothing...Ch. 2 - Hicks Contracting collects and analyzes cost data...Ch. 2 - Rose Company has a relevant range of production...Ch. 2 - Carr Company provides human resource consulting...Ch. 2 - Western Trucking operates a fleet of delivery...Ch. 2 - Suppose that a company has fixed costs of $18 per...Ch. 2 - The cost data for Evencoat Paint for the year 2019...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Winterfell Products manufactures electrical...Ch. 2 - CPK ** Associates is a mid-size legal firm,...Ch. 2 - Flip or Flop is a retail shop selling a wide...Ch. 2 - Roper Furniture manufactures office furniture and...Ch. 2 - Baxter Company has a relevant range of production...Ch. 2 - Sanchez & Vukmin, LLP, is a full-service...Ch. 2 - Case Airlines provides charter airline services....Ch. 2 - Suppose that a company has fixed costs of $11 per...Ch. 2 - The cost data for BC Billing Solutions for the...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Ballentine Manufacturing produces and sells...Ch. 2 - Tom West is a land surveyor who operates a small...Ch. 2 - Just Beachy is a retail business located on the...Ch. 2 - Listed as follows are various costs found in...Ch. 2 - Wachowski Company reported these cost data for the...Ch. 2 - Carolina Yachts builds custom yachts in its...Ch. 2 - Hicks Products produces and sells patio furniture...Ch. 2 - Conner ** Scheer, Attorneys at Law, provide a wide...Ch. 2 - Puzzles, Pranks ** Games is a retail business...Ch. 2 - Pocket Umbrella, Inc. is considering producing a...Ch. 2 - Using the costs listed in the previous problem,...Ch. 2 - Gadell Farms produces venison sausage that is...Ch. 2 - In a team of two or three students, interview the...Ch. 2 - This list contains costs that various...
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- Fixed costs are expenses that ______________________________ . A. vary in response to changes in activity level B. remain constant on a per-unit basis C. increase on a per-unit basis as activity increases D. remain constant as activity changesarrow_forwardWhich of the following statements is true regarding average fixed costs? A. Average fixed costs per unit remain fixed regardless of level of activity. B. Average fixed costs per unit rise as the level of activity rises. C. Average fixed costs per unit fall as the level of activity rises. D. Average fixed costs per unit cannot be determined.arrow_forwardThe amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped costarrow_forward
- When fixed costs increase and all other variables remain unchanged, the contribution margin will A. remain unchanged _____________________. B. increase C. decrease D. increase variable costs per unitarrow_forwardWhen the number of units in ending inventory increases through the year, which of the following is true? A. Net income is the same for variable and absorption costing. B. Net income is higher for variable costing than for absorption costing. C. Net income is higher for absorption costing than for variable costing. D. There is no relationship between net Income and the costing method.arrow_forwardVariable costs are costs that: A.vary inversely proportional with changes in activity B.Remain constant as activity changes C.Decrease on a per unit basis as activity increases D.Remain constant on a per unit basis as activity changesarrow_forward
- Variable costs are costs that: a) Vary inversely proportional with changes in activity b) Remain constant as activity changes c) Decrease on a per unit basis as activity increases d) Remain constant on a per unit basis as activity changesarrow_forward(a) Variable Costs are costs that change in direct proportion to changes in activity level. (b) Unit variable cost remain constant regardless of the level of activity a. Both statements are true b. Both statements are false c. Statement A is true and statement B is false d. Statement A is false and statement B is truearrow_forwardThe high-low method: a. Calculates variable costs per unit by dividing the difference in the high and low activity levels by the high and low costs b. Assumes that the fixed portion of the mixed cost is the lowest monthly cost incurred during the period under consideration c. Allows differentiation between fixed and variable costs when dealing with mixed costs d. Combines the fixed and variable portions of a cost to determine the total costarrow_forward
- Compute the Revenue Effect- Growth Component, indicate if favorable/(unfavorable). *The activity driver for conversion cost is the direct labor hours. Compute the Cost Effect- Price Recovery Component indicate if favorable/(unfavorable). *The activity driver for conversion cost is the direct labor hours.arrow_forwardDescribe how total variable costs and unit variable costs behave with changes in the level of activity. Describe the behavior of (a) total fixed costs and (b) unit fixed costs as the level of activity increases. In applying the high-low method of cost estimation, how is the total fixed cost estimated? An examination of the accounting records of Larredo Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely means of improving operating income. If the unit cost of direct materials is decreased, what effect will this change have on the break-even point? What does operating leverage measure, and how is it computed?arrow_forwardWhich of the following statements is true regarding average fixed costs? Select one: a. Average fixed costs per unit fall as the level of activity rises. b. Average fixed costs per unit cannot be determined. c. Average fixed costs per unit remain fixed regardless of level of activity. d. Average fixed costs per unit rise as the level of activity rises.arrow_forward
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