1. A variable cost is a cost that a. remains the same despite changes in the level of activity.

b. occurs at various times during the year.

c. varies in total in proportion to changes in the level of activity. d. may or may not be incurred, depending on management's discretion.

2. Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

a. Direct materials cost b. Direct labor cost c. Variable manufacturing overhead d. Fixed manufacturing overhead

3. The Chambers Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at 2,300 machine hours. The records also indicated that overhead of $9,730 was incurred at 2,600 machine hours. What is the variable cost per machine hour using the high-low method to estimate the cost equation?

a. $2.78 b. $2.86 c. $3.10 d. $3.38

4. Southern Companys budgeted and actual sales for 2009 were:

Product	Budgeted Sales	Actual Sales
X	20,000 units at $5.00 per unit	17,500 units at $5.30 per unit
Y	35,000 units at $9.00 per unit	37,300 units at $8.80 per unit

What is the sales volume variance for the two products?

a. $6,990 Favorable b. $8,200 Favorable c. $6,990 Unfavorable d. $8,200 Unfavorable

5. Southern Company manufactures Product X. The standard cost of one unit of output is $12.00 (four pieces at $3.00 per piece). During the first quarter, 5,000 units were made, at an actual cost of $10.50 per unit (three pieces were $3.50 per piece). What is the material price variance?

a. $7,500 Favorable b. $10,000 Favorable c. $7,500 Unfavorable d. $10,000 Unfavorable