Multiple Choice Questions

1. You are given the following cost and volume information for a cost incurred in the production of automobiles:

Volume (in units) Cost per Unit (in $)

1 .............1,500

10 ............ 150

100 ............. 15

What type of cost is given?

a. Fixed cost

b. Variable cost

c. Step cost

d. None of the above

2. You are given the following cost and volume information for a cost incurred in servicing insurance claims:

Volume (in # of claims) Cost per Claim (in $)

1 ............150

10 ...........150

100 ...........150

What type of cost is given?

a. Fixed cost

b. Variable cost

c. Step cost

d. None of the above

3. A particular cost incurred during the installation of cable television exhibits the following behavior. Based on the cost and volume information given, what type of cost is being described?

Volume (in # of installations) Total Cost (in $)

1 ............ 15

10 ............. 150

100 ...........1,500

a. Fixed cost

b. Variable cost

c. Mixed cost

d. The type of cost cannot be determined.

4. Certain costs incurred in a doctor’s office exhibit the following behavior as the number of patients increases. What type of cost is being described?

Volume (in patients) Total Cost (in $)

1 ............. 25

10 .............. 190

100 ............1,200

a. Fixed cost

b. Variable cost

c. Mixed cost

d. The type of cost cannot be determined.

5. You are given the following cost and volume information related to the production of 60-inch LCD televisions:

Volume (in units) Cost per Unit (in $)

1 .............1,200

10 .............1,200

100 ............1,200

What type of cost is described?

a. Fixed cost

b. Variable cost

c. Step cost

d. None of the above

6. You are given the following cost and volume information related to overhead costs incurred in the production of laptop computers:

Volume (in units) Cost per Unit (in $)

1 .............1,200

10 ............. 120

100 ............ 12

What type of overhead cost is described?

a. Fixed cost

b. Variable cost

c. Step cost

d. None of the above

7. The cost of a certain material used in the production of textbooks is shown below for various volume levels. Based on this information, the material costs are best described as what type of cost?

Volume (in units) Cost per Unit (in $)

1 ............. 4

10 ............ 40

100 ............400

a. Fixed cost

b. Variable cost

c. Mixed cost

d. The type of cost cannot be determined.