Survey Of Accounting 7th Edition By Carl Warren – Test Bank

1. Cost behavior refers to the manner in which a cost changes as a related activity changes.
a. True
b. False

ANSWER: True

2. Cost behavior refers to the manner in which a cost changes as a related activity changes.
a. True
b. False

ANSWER: True

3. The variable cost per unit remains constant with changes in the level of activity.
a. True
b. False

ANSWER: True

4. Monthly rent on a factory building is an example of a fixed cost.
a. True
b. False

ANSWER: True

5. Direct materials cost is an example of a fixed cost of production.
a. True
b. False

ANSWER: False

6. The relevant range is useful for analyzing cost behavior for management decision-making purposes.
a. True
b. False

ANSWER: True

7. The range of activity over which changes in cost are of interest to management is called the relevant range.
a. True
b. False

ANSWER: True

8. Total fixed costs remain constant as the level of activity changes within the relevant range.
a. True
b. False

ANSWER: True

9. The graph of the variable costs when plotted against the activity level appears as a line parallel to horizontal axis.

a. True
b. False

ANSWER: False

10. Fixed costs are costs that vary in total dollar amount as the level of activity changes.
a. True
b. False

ANSWER: False

11. A production supervisor’s salary that does not vary with the number of units produced is an example of a fixed cost.
a. True
b. False

ANSWER: True

12. Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.
a. True
b. False

ANSWER: False