Total Variable Costs Essay

1438 Words Jan 23rd, 2013 6 Pages
MODULE 2

1. To predict costs and manage them on a day-to-day basis, managers must identify: A. cost of resources used B. key activities and resources used to perform activities C. cost drivers D. all of the above

2. Cost drivers are ________. A. measures of activities that require the use of resources and thereby cause costs B. different types of functional areas in the firm C. different types of cost calculations D. the different functions in the value chain

3. Which of the following statements about costs is FALSE? A. Managers can control costs without understanding how activities of an organization affects its costs. B. It is important to identify the appropriate cost drivers. C. An organization may have cost drivers across various
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A. labor wages of workers who mix dairy ingredients to make ice cream B. cost of dairy ingredients used to produce ice cream C. fuel used by delivery trucks D. factory supervisory salaries

24. An increase in total variable costs usually indicates ________. A. the cost-driver activity level is decreasing B. the cost-driver activity level is increasing C. fixed costs per unit is increasing D. variable costs per unit is decreasing

25. Costs that change abruptly at different levels of activity because the resources and their costs come in indivisible chunks are called ________. A. variable costs B. mixed costs C. fixed costs D. step costs

26. Palmer Inc. currently produces 110,000 units at a cost of $440,000. The cost is variable. Next year Palmer Inc. expects to produce 115,000 units. Palmer's relevant range for production is 100,000 to 120,000 units. If 115,000 units are produced next year, what is the expected variable cost? A. $420,000 B. $440,000 C. $430,000 D. $460,000

27. In a small construction firm, a crew supervisor is added for every ten workers employed. The salaries of the crew supervisors are a ________. A. variable cost B. step cost C. mixed cost D. fixed cost

28. The Milwaukee Recreation Center is planning its annual fundraiser. The event committee has developed the following budget for the event. Ballroom rental $2,900 Entertainment $4,500 Printing $600 plus $10 per guest Food $29 per guest Decorations $700 plus $5 per

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