10. A variable cost is a cost that A. varies per unit at every 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. E. none of the above 11. A fixed cost is a cost which A. varies in total with changes in the level of activity B. remains constant per unit with changes in the level of activity C. varies inversely in total with changes in the level of activity D. remains constant in total with changes in the level of activity E. none of the above 12. Why is identification of the relevant range important? A. Identification of the relevant range is required under GAAP. B. Cost behavior outside of the relevant range is not linear, which distorts cost-volume-profit (CVP) analysis. C. The relevant range directly impacts the quantity of units of product a customer buys. D. The relevant range is a cost that is incurred by a company that must be accounted for. E. none of the above 13. Valle Crucis Cabins has 7 units for rent. In July, all units were rented for all 31 days of the month. The July utility bill was $2,340. In February, 5 cabins were rented for 10 days each. The February utility bill was $670. In April, 6 cabins were rented for 14 days each and the monthly utility bill was $980. Use the high-low method to determine the estimated unit variable cost component of the company's utility bill. A. $10 per day B. $10.78 (rounded) per day C. $13.40 per day D. $1,670 in total E. none of the above 14. At the high level of activity in November, 7,000 machine hours were used and power costs were $18,000. In April, a month of low activity, 2,000 machine hours were used and power costs were $9,000. Using the high-low method, estimated unit variable cost is $1.80 per machine hour. Using the high-low method, the estimated fixed cost component of power costs is A. $18,000 B. $9,000 C. $5,400 D. $12,600 E. none of the above