Which of the following cost behaviors describes a cost that remains constant in total regardless of changes in the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: a) Fixed cost
Which cost behavior represents a cost that changes in direct proportion to changes in the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
A cost that includes both a fixed component and a variable component is known as:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
Which of the following cost behaviors shows a cost that remains constant per unit but varies in total with changes in the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
Costs that increase abruptly in total when certain activity thresholds are reached are called:
a) Fixed costs
b) Variable costs
c) Semi-variable costs
d) Step costs
Answer: d) Step costs
Which of the following cost behaviors is associated with a cost that jumps to a new level when the activity level reaches a certain point?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: d) Step cost
The slope of the cost line on a graph represents:
a) Fixed cost per unit
b) Variable cost per unit
c) Total cost per unit
d) Step cost per unit
Answer: b) Variable cost per unit
If the cost line on a graph is a horizontal straight line, it indicates:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: a) Fixed cost
The contribution margin ratio is calculated by dividing the:
a) Total fixed costs by total variable costs
b) Total variable costs by total fixed costs
c) Total variable costs by total sales revenue
d) Total fixed costs by total sales revenue
Answer: c) Total variable costs by total sales revenue
Which of the following is not a method for analyzing cost behavior?
a) High-low method
b) Scatterplot method
c) Least squares regression method
d) Random sampling method
Answer: d) Random sampling method
Which cost behavior represents a cost that remains constant per unit but varies inversely with changes in the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
The cost behavior that exhibits a curved relationship between cost and activity level is known as:
a) Fixed cost
b) Variable cost
c) Non-linear cost
d) Step cost
Answer: c) Non-linear cost
The cost behavior that shows a combination of fixed and variable costs but with a constant incremental rate is called:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
The cost behavior that remains constant within a specific range of activity levels and then changes abruptly to a new level is referred to as:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: d) Step cost
The scatterplot method is used to analyze cost behavior by plotting:
a) Total cost against total revenue
b) Total cost against activity level
c) Variable cost against fixed cost
d) Variable cost against revenue
Answer: b) Total cost against activity level
The high-low method is a technique for estimating cost behavior that uses:
a) The highest and lowest activity levels to calculate fixed cost per unit
b) The highest and lowest activity levels to calculate variable cost per unit
c) The highest and lowest costs to calculate fixed cost per unit
d) The highest and lowest costs to calculate variable cost per unit
Answer: b) The highest and lowest activity levels to calculate variable cost per unit
The least squares regression method is a statistical technique used to:
a) Determine the relationship between cost and activity level
b) Calculate fixed cost per unit
c) Calculate variable cost per unit
d) Determine the break-even point
Answer: a) Determine the relationship between cost and activity level
The cost behavior that is unaffected by changes in the level of activity is:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: a) Fixed cost
The cost behavior that can be easily identified by its proportional relationship with activity level is:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
The cost behavior that exhibits a constant increase in total cost with each additional unit of activity is:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
Which cost behavior represents a cost that decreases in total as the level of activity increases?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: d) Step cost
The range of activity over which the cost behavior remains constant is known as the:
a) Relevant range
b) Break-even range
c) Variable range
d) Fixed range
Answer: a) Relevant range
The cost behavior that exhibits a fixed cost per unit but a variable cost in total is called:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
The method of cost analysis that uses a mathematical formula to estimate cost behavior is:
a) High-low method
b) Scatterplot method
c) Least squares regression method
d) Random sampling method
Answer: c) Least squares regression method
Which of the following statements is true regarding step costs?
a) They are always variable costs.
b) They are always fixed costs.
c) They remain constant in total but vary per unit.
d) They increase abruptly at certain activity levels.
Answer: d) They increase abruptly at certain activity levels.
The cost behavior that shows a gradual increase or decrease in total cost with changes in the level of activity is known as:
a) Fixed cost
b) Variable cost
c) Non-linear cost
d) Step cost
Answer: c) Non-linear cost
The cost behavior that has a constant cost per unit but increases proportionally with changes in the level of activity is called:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
Which cost behavior represents a cost that remains the same regardless of changes in the level of activity, but changes in increments when certain thresholds are reached?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
The concept of cost behavior is important for:
a) Budgeting and forecasting
b) Profitability analysis
c) Pricing decisions
d) All of the above
Answer: d) All of the above
The cost behavior that shows a direct relationship between cost and activity level is known as:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: b) Variable cost
Which cost behavior represents a cost that fluctuates irregularly with changes in the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: c) Semi-variable cost
The concept of cost behavior is used to classify costs for the purpose of:
a) Financial reporting
b) Cost control
c) Decision making
d) Taxation purposes
Answer: c) Decision making
The cost behavior that shows a constant cost per unit but increases proportionally with changes in the level of activity is called:
a) Fixed cost
b) Variable cost
c) Step cost
d) Non-linear cost
Answer: b) Variable cost
The range of activity over which cost behavior assumptions remain valid is known as the:
a) Relevant range
b) Variable range
c) Cost range
d) Break-even range
Answer: a) Relevant range
The cost behavior that represents a cost that varies randomly and unpredictably with changes in the level of activity is known as:
a) Fixed cost
b) Variable cost
c) Non-linear cost
d) Indirect cost
Answer: c) Non-linear cost
Which of the following cost behaviors is associated with a cost that remains constant regardless of the level of activity?
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Non-linear cost
Answer: a) Fixed cost
The cost behavior that shows a cost that decreases proportionally as the level of activity increases is called:
a) Fixed cost
b) Variable cost
c) Step cost
d) Non-linear cost
Answer: b) Variable cost
The concept of cost behavior is important in understanding the:
a) Relationship between costs and profits
b) Impact of volume changes on costs
c) Cost structure of a business
d) All of the above
Answer: d) All of the above
The cost behavior that shows a constant total cost regardless of changes in the level of activity is known as:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Non-linear cost
Answer: a) Fixed cost
The cost behavior that represents a cost that increases in large, discrete increments at specific activity levels is called:
a) Fixed cost
b) Variable cost
c) Semi-variable cost
d) Step cost
Answer: d) Step cost