Which of the following statements are true? 1. Variable costs per unit are not affected by changes in activity. 2. The relevant range concept is applicable to mixed costs. 3. A variable cost remains constant if expressed on a unit basis. 4. A fixed cost is not constant per unit of product. Both statement II and IV are true. O All statements are true. O Both statement I and II are true. O Only statement III is true.

Which of the following statements are true? 1. Variable costs per unit are not affected by changes in activity. 2. The relevant range concept is applicable to mixed costs. 3. A variable cost remains constant if expressed on a unit basis. 4. A fixed cost is not constant per unit of product. Both statement II and IV are true. O All statements are true. O Both statement I and II are true. O Only statement III is true.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(a) Variable Costs are costs that change in direct proportion to changes in activity level. (b) Unit variable cost remain constant regardless of the level of activity a. Both statements are true b. Both statements are false c. Statement A is true and statement B is false d. Statement A is false and statement B is true
3. Which of the following is correct regarding a relevant range? a Total variable costs will not change. b. Total flxed costs will not change. C Actual fixed costs usually fall outside the relevant range. d. The relevant range cannot be changed after being established.
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Consider the following statements: (1) Total costs will equal the sum of fixed and variable costs. (2) Total costs will equal the sum of direct and indirect costs. Which of these statements is/are correct? A. 2 only OB. 1 only OC. Neither 1 nor 2 OD. 1 and 2
5. Which of the following statements is correct: A. total fixed cost remain constant while variable cost as total increases as level of activities decreases. B. fixed cost per unit and total variable costs increases as level of activities increases. C. variable cost per unit and total fixed cost remain constant as level of activities increases. D. fixed cost per unit remain constant and variable cost per unit decreases as level of activities decreases. W Pe
"A variable cost is a cost that varies per unit of product, Q- 1: whereas a fixed cost is constant per unit of product." Do you agree? Explain.
Which of the following statements is false? (You may select more than one answer.)a. Under some circumstances, a sunk cost may be a relevant cost.b. Future costs that do not differ between alternatives are irrelevant.c. The same cost may be relevant or irrelevant depending on the decision context.d. Only variable costs are relevant costs. Fixed costs cannot be relevant costs.
Which of the following statements about CVP analysis is true? O a. Unit selling price, unit variable costs, and total fixed costs are known and remain constant . b. All of the given answers are false. O . Operating income calculations in CVP analysis are based on gross margin. O d The CVP analysis assumes that total variable costs remain the same over a relevant range .
Which of the following statements is TRUE? O A. Variable costs per unit decrease as production levels increase. O B. Fixed costs per unit decrease as production levels increase. OC. Total indirect costs are always greater than total direct costs. O D. Direct costs are usually overheads.
Which of the following statements about CVP analysis is false? a. The CVP analysis assumes that total variable costs remain the same over a relevant range. O b. Total revenues and total costs are linear in relation to output units. OC. All of the given answers are true. O d. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O e. Operating income calculations in CVP analysis are based on contribution margin not gross margin.
Which of the following statements about determining the breakeven point is FALSE? a) Breakeven revenues equal fixed costs divided by the variable cost per unit. b) Revenues equal fixed costs plus variable costs. c) Operating income is equal to zero. d) Contribution margin minus fixed costs is equal to zero.
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