COST ACCOUNTING

1. Which of the following statement is true?

a. The higher the production within the relevant range, the higher the fixed cost per unit.
b. The higher the production within the relevant range, the higher the variable cost per unit.
c. The lower the production within the relevant range, the lower the total fixed cost.
d. The lower the production within the relevant range, the lower the total variable cost.

2. As volume increases,
a. Total fixed costs remain constant and per unit fixed cost increase.
b. Total fixed costs remain constant and per unit fixed cost decrease.
c. Total fixed costs remain constant and per unit fixed costs remain constant.
d. Total fixed costs increase and per unit fixed costs increase.

3. Within the relevant range, the amount of variable cost per unit.
a. Differs at each production level.
b. Increases as production increases.
c. Decreases as production increases.
d. Remains constant at each production level.

4. Which of the following best describes a fixed cost?

a. It may change in total when such change is unrelated to changes in production.
b. It may change in total when change is related to changes in production.
c. It is constant per unit of changes in production.
d. It may change in total when such change depends upon production or within relevant range.

5. Fixed cost that cannot be reduced within a short period of time is

a. Committed c. Avoidable
b. Variable d. Unnecessary

6. An example of a discretionary fixed cost would be

a. Depreciation of equipment c. Salaries of top management
b. Rent in factory building d. Research and development

7. Which of the following best describes a step cost?

a. It varies less than proportionately with volume.
b. It varies more than proportionately with volume.
c. It is partly variable and partly fixed.
d. It increases abruptly outside the relevant range.

8. In describing the cost formula equation, y=a+bx, which of the following statements is correct?
a. y is the independent variable.
b. a is the variable rate.
c. a and b is valid for all levels of activity.
d. In the high low method, b equals the change in cost divided by the change in activity.

9. The fixed cost of a semi-variable cost is comparable to the mathematic concept of

a. y intercept c. Dependent variable
b. Slope of the line d. Independent variable

10. Which of the following is not a method of splitting a semi-variable cost?

a. High and low point c. Scatter chart
b. Method of least squares d. Linear programming