Which of the following best describes a fixed cost?
A. It may only change in total when such change is unrelated to changes in production volume (i.e. inflation).
B. It may change in total when such change is related to changes in production volume.
C. It is constant per unit of change in production volume.
D. It may change in total when such change depends on production volume within the relevant range.
QUESTION 2
Period costs are best described as those costs:
A. Incurred periodically (i.e. not on a regular basis).
B. Incurred as a result of activities that occur inside the production building.
C. That increase as a result of a change in volume for a particular period.
D. Incurred as a result of activities that occur outside of the production building.
QUESTION 3
What is the result when the contribution margin ratio increases?
A. Break-even point increases
B. Fixed Cost decreases
C. Break-even point decreases
D. No effect on break-even points
QUESTION 4
Variable costs within the relevant range for a firm are assumed:
A. Not to vary per unit.
B. Not to vary in total.
C. To be nonlinear (i.e. not a straight line when graphed).
D. To be unpredictable.
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