Onc underlying activity changes e a static budget has been determined, it is changed regularly as the 15. them by senior management iew budgeting more positively when goals are established for MULTIPLE CHOICE Which of the following describes the behavior of the variable cost per unit? It varies in increasing proportion with changes in the activity level It varies in decreasing proportion with changes in the activity level. It varies in direct proportion with the activity level It remains constant with changes in the activity level b. 2 Which of the following describes the behavior of the fixed cost per unit? It decreases with decreasing production It decreases with increasing production. It remains constant with changes in production. It increases with increasing production. b. The three (3) nost common cost behavior classifications are: Variable costs, product costs, and sunk costs. b. c. d. Variable costs, sunk costs, and opportunity costs Variable costs, period costs, and differential costs Fixed costs, variable costs, and mixed costs. 4.For purposes of analysis, mixed costs are generally: Separated into their variable and fixed cost components. Classified as variable costs. Classified as period costs. Classified as fixed costs. a. b. c. d. A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was: a. $90,000. b. $140,000. 5. $150,000. d. $210,000. Once a static budget has been determined, it is changed regularly as the underlying activity changes 14 15. mployees view budgeting more positively when goals are established for them by senior management MULTIPLE CHOICE Which of the following describes the behavior of the variable cost per unit? a. It varies in increasing proportion with changes in the activity level. b. It varies in decreasing proportion with changes in the activity level. It varies in direct proportion with the activity level c. d. It remains constant with changes in the activity level. of the following describes the behavior of the fixed cost per unit? It decreases with decreasing production It decreases with increasing production. It remains constant with changes in production. 2 a. b. c. d. It increases with increasing production. The three (3) most common cost behavior classifications are a. Variable costs, product costs, and sunk costs b. Variable costs, sunk costs, and opportunity costs. Variable costs, period costs, and differential costs. c. d. Fixed costs, variable costs, and mixed costs. For purposes of analysis, mixed costs are generally: Separated into their variable and fixed cost components. Classified as variable costs. Classified as period costs. a. b. c. d. Classified as fixed costs. A firm operated at 80% of capacity for the past year, during which f costs were $210,000, variable costs were 70% of sales, and sales $1,000,000. Operating profit was: a. $90,000. b. $140,000 c. $150,000