Cost Accounting QuizCost Behavior and Relevant Range quiz 25/05/2026 1 min read Cost Behavior and Relevant Range 10 questions in 10 minutes Pass Score 70% 1 / 10 Which one of the following refers to a cost that remains the same as the volume of activity decreases within the relevant range ? Total variable cost Variable cost per unit Unit fixed 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 2 / 10 When identifying fixed and variable costs, which one of the following is a typical assumption concerning cost behavior ? Total costs are assumed to be linear when plotted on a graph The relevant time period is assumed to be 5 years Cost behavior is assumed to be realistic for all levels of activity from zero to maximum capacity General and administrative costs are assumed to be variable costs Total costs, being a mixture of fixed and variable costs, are assumed to be linear 3 / 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 Board of directors’ fees when the cost objective is the Marketing Department A production supervisor’s salary when the cost objective is the Production 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. 4 / 10 Which of the following is thebestexample of a variable cost ? Interest charges Property taxes Cost of raw material The corporate president’s salary Variable costs vary directly with the level of production. As production increases or decreases, material cost increases or decreases, usually in a direct relationship 5 / 10 The sum of the costs necessary to effect a one-unit increase in the activity level is a(n) : Differential cost Marginal cost Opportunity cost Incremental 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. 6 / 10 Theleastexact method for separating fixed and variable costs is : The high-low method Computer simulation Matrix algebra The least squares method The fixed and variable portions of mixed costs may be estimated by identifying the highest and the lowest costs within the relevant range. The difference in cost divided by the difference in activity is the variable rate. Once the variable rate is found, the fixed portion is determinable. The high-low method is a simple approximation of the mixed cost formula. The costs of using more sophisticated methods sometimes outweigh the incremental accuracy achieved. In these cases, the high-low method is sufficient 7 / 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 isincorrect? The variable electricity cost per unit of production will remain constant as production volume increases The fixed electricity cost per unit of production will decline as production volume increases The total electricity cost per unit of production will increase 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 8 / 10 Which one of the following is correct regarding a relevant range ? Actual fixed costs usually fall outside the relevant range Total fixed costs will not change Total variable costs will not change The relevant range cannot be changed after being established 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 9 / 10 The difference between variable costs and fixed costs is : Variable costs per unit fluctuate and fixed costs per unit remain constant Variable costs per unit change in varying increments, while fixed costs per unit change in equal increments Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change 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 10 / 10 Which one of the following categories of cost is most likelynotconsidered a component of fixed factory overhead ? Depreciation Property taxes Rent Power 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 Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback 🚀 Join Telegram Group 📢 Telegram Channel 📘 Facebook Group 👍 Facebook Page 📌 Pinterest
