If production output doubles, variable costs PER UNIT will: (Learning Objective 1 Ch5)

A)

Reduce by half

B)

Double

C)

Remain constant

D)

None of these

2

If production output halves, fixed costs PER UNIT will: (Learning Objective 2 Ch5)

A)

Reduce by half

B)

Double

C)

Remain constant

D)

None of these

3

A cost that behaves in the following way is a: Ad MCQs Ch5 Q3 (13.0K)Ad MCQs Ch5 Q3 (Learning Objective 2 Ch5)

A)

Fixed cost

B)

Variable cost

C)

Mixed cost

D)

Step costs

4

In describing the cost equation, Y = a + bX, ‘a’ is: (Learning Objective 3 Ch5)

A)

the dependent variable, cost.

B)

the independent variable, the level of activity.

C)

the total fixed costs.

D)

the variable cost per unit of activity.

5

Jay PLC made 500 units of product Y in April with a total cost of £10,000, and 800 units in May with a total cost of £13,000 Using the high/low method of analysing costs, what will be their total cost in June, if they make 700 units?
(Learning Objective 4 Ch5)

A)

£12,000

B)

£14,000

C)

£11,375

D)

£12,500

6

A disadvantage of the high-low method of cost analysis is that (Learning Objective 5 Ch5)

A)

it cannot be used when there are a very large number of observations.

B)

it is too time consuming to apply.

C)

it uses two extreme data points, which may not be representative of normal conditions.

D)

it relies totally on the judgment of the person performing the cost analysis.

7

The least squares method takes all data into account when calculating the cost formula
(Learning Objective 6 Ch5)

A)

True

B)

False

8

Digibox Ltd sells a single type of set-top digital conversion box. Estimated unit data for the year is as follows: Ad MCQs Ch5 Q8 (15.0K)Ad MCQs Ch5 Q8
Total fixed costs are estimated at £65,000 for administration and £50,000 for selling and distribution. Estimated sales for the year are 6,000 boxes.
The total contribution is:

(Learning Objective 7 Ch5)

A)

£145,000

B)

£160,000

C)

£210,000

D)

£95,000

9

Carr Company reports the following data for the first six months of the year:
Reference: [Carr Company] Ad MCQs Ch5 Q9 (36.0K)Ad MCQs Ch5 Q9
Using the least-squares regression method, the estimated variable electrical cost per machine hour is closest to:
(Learning Objective 8 Ch5)

A)

£0.91

B)

£0.10

C)

£0.20

D)

£0.25

10

When determining whether a measurable learning effect is present, it’s important to exclude all non-labour related costs.
(Learning Objective 9 Ch5)

A)

True

B)

False

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