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Management Accounting

Willie Seal, University of Essex, UK
Ray Garrison, Brigham Young University, Provo, Utah, USA
Eric Noreen, INSEAD, France

Cost Behaviour: Analysis and Use

Self-test Questions


1	When units produced increase, total variable costs……… (Learning Objective 1 Ch 5)
		A)	increase in proportion to the units produced
		B)	increase at a greater rate than units produced
		C)	increase at a lesser rate than units produced
		D)	stay the same


2	As production increases, total fixed costs ……… (Learning Objective 2 Ch 5)
		A)	increase in proportion to the units produced
		B)	increase at a greater rate than units produced
		C)	increase at a lesser rate than units produced
		D)	stay the same


3	When units produced increase, variable cost per unit……… (Learning Objective 1 Ch 5)
		A)	increase in proportion to the units produced
		B)	increase at a greater rate than units produced
		C)	increase at a lesser rate than units produced
		D)	stay the same


4	As production increases, fixed cost per unit ……… (Learning Objective 2 Ch 5)
		A)	decrease
		B)	increase
		C)	we can't tell
		D)	stay the same


5	Which is the correct equation that calculates P (the net profit) Selling Price per unit = £S Variable Cost per unit = £V Number of units sold = U units Total Fixed costs = £F (Learning Objective 3 Ch 5)
		A)	P = SV - F
		B)	P = U (S – V) - F
		C)	P = FS - V
		D)	P = S (V – S)


6	The line equation expressing the total costs using the high low method might be expressed as follows from the following information: Total Fixed costs = £10,000 Variable cost per unit = £5 (Learning Objective 4 Ch 5)
		A)	x = 5y - 10,000
		B)	x = 10,000y - 5
		C)	y = 5x + 10,000
		D)	y = 10,000x + 5


7	The Scattergraph method ……………. (Learning Objective 5 Ch 5)
		A)	Is a more accurate method of analysing mixed costs than the high-low method
		B)	Is a less accurate method of analysing mixed costs than the high-low method
		C)	They are about the same
		D)	It depends.


8	A Learning curve shows that as experience increase the amount of time taken to perform a function …………… (Learning Objective 8 Ch 5)
		A)	increases with experience
		B)	reduces with experience
		C)	stays the same
		D)	none of these

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