Cost Behavior and Relevant Range quiz Cost Accounting Quiz On Feb 23, 2026 Share Follow the Facebook page Accountants Quiz and join the group Accounting Quiz Cost Behavior and Relevant Range 10 questions in 10 minutes Pass Score 70% 1 / 10 Which of the following is the best example of a variable cost ? Cost of raw material Interest charges The corporate president’s salary Property taxes Variable costs vary directly with the level of production. As production increases or decreases, material cost increases or decreases, usually in a direct relationship 2 / 10 A fixed cost that would be considered a direct cost is : The rental cost of a warehouse to store inventory when the cost objective is the Purchasing Department A cost accountant’s salary when the cost objective is a unit of product A production supervisor’s salary when the cost objective is the Production Department Board of directors’ fees when the cost objective is the Marketing Department A direct cost is one that can be specifically associated with a single cost objective in an economically feasible way. Thus, a production supervisor‟s salary can be directly associated with the department (s)he supervises. 3 / 10 Which one of the following categories of cost is most likely not considered a component of fixed factory overhead ? Depreciation Power Property taxes Rent A fixed cost is one that remains unchanged within the relevant range for a given period despite fluctuations in activity. Such items as rent, property taxes, depreciation, and supervisory salaries are normally fixed costs because they do not vary with changes in production. Power costs, however, are at least partially variable because they increase as usage increases 4 / 10 Lar Company has found that its total electricity cost has both a fixed component and a variable component within the relevant range. The variable component seems to vary directly with the number of units produced. Which one of the following statements concerning Lar‟s electricity cost is incorrect ? The total electricity cost per unit of production will increase as production volume increases The fixed electricity cost per unit of production will decline as production volume increases The variable electricity cost per unit of production will remain constant as production volume increases The total electricity cost will increase as production volume increases Because of the fixed portion, the per-unit cost of a mixed, or semivariable, cost will decrease as production volume increases 5 / 10 The difference between variable costs and fixed costs is : Variable costs per unit change in varying increments, while fixed costs per unit change in equal increments Variable costs per unit fluctuate and fixed costs per unit remain constant Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable Fixed costs remain unchanged within the relevant range for a given period despite fluctuations in activity, but per unit fixed costs do change as the level of activity changes. Thus, fixed costs are fixed in total but vary per unit as activity changes. Total variable costs vary directly with activity. They are fixed per unit, but vary in total 6 / 10 Which one of the following refers to a cost that remains the same as the volume of activity decreases within the relevant range ? Variable cost per unit Unit fixed cost Total variable cost Average cost per unit Variable cost per unit remains constant in the short run regardless of the level of production. This is in contrast with variable costs in total, which vary directly and proportionally with changes in volume 7 / 10 The relevant range refers to the activity levels over which : Costs fluctuate Production varies Cost relationships hold constant Relevant costs are incurred The relevant range defines the limits within which per-unit variable costs remain constant and fixed costs are not changeable. It is synonymous with the short run. The relevant range is established by the efficiency of a company‟s current manufacturing plant, its agreements with labor unions and suppliers, etc 8 / 10 The sum of the costs necessary to effect a one-unit increase in the activity level is a(n) : Marginal cost Incremental cost Differential cost Opportunity cost A marginal cost is the sum of the costs necessary to effect a one-unit increase in the activity level. Differential (or incremental) cost is the difference in total cost between two decisions. Opportunity cost is the maximum benefit forgone by using a scarce resource for a given purpose. It is the benefit, for example, the contribution to income, provided by the best alternative use of that resource. 9 / 10 Cell Company has discovered that the cost of processing customer invoices is strictly variable within the relevant range. Which one of the following statements concerning the cost of processing customer invoices is incorrect ? The total cost of processing customer invoices will increase as the volume of customer invoices increases The cost of processing the 100th customer invoice will be the same as the cost of processing the first customer invoice The cost per unit for processing customer invoices will decline as the volume of customer invoices increases The average cost per unit for processing a customer invoice will equal the incremental cost of processing one more customer invoice Variable cost per unit remains constant in the short run regardless of the level of production (The total cost of processing customer invoices will increase as the volume of customer invoices increases) incorrect : Since the cost in question is strictly variable within the relevant range, the total cost will increase as the volume increases. (The cost of processing the 100th customer invoice will be the same as the cost of processing the first customer invoice) incorrect : Since the cost in question is strictly variable within the relevant range, the unit cost remains the same. (The average cost per unit for processing a customer invoice will equal the incremental cost of processing one more customer invoice) incorrect : Since the cost in question is strictly variable within the relevant range, the average cost per unit is the same as the incremental cost. 10 / 10 Which one of the following is correct regarding a relevant range ? Actual fixed costs usually fall outside the relevant range The relevant range cannot be changed after being established Total fixed costs will not change Total variable costs will not change The relevant range is the range of activity over which unit variable costs and total fixed costs are constant. The incremental cost of one additional unit of production will be equal to the variable cost Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback a cost remains unchanged when the volume of activity changes within the relevant range.a statistical method for identifying cost behavior is calleda statistical method for identifying cost behavior is the
