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Advanced Multiple Choice Quiz
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1If 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


2If 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


3A cost that behaves in the following way is a:
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(Learning Objective 2 Ch5)
A)Fixed cost
B)Variable cost
C)Mixed cost
D)Step costs


4In 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.


5Jay 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


6A 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.


7The least squares method takes all data into account when calculating the cost formula
(Learning Objective 6 Ch5)
A)True
B)False


8Digibox Ltd sells a single type of set-top digital conversion box. Estimated unit data for the year is as follows:
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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


9Carr Company reports the following data for the first six months of the year: Reference: [Carr Company]
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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


10When 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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