Question 1

Fixed cost per unit continuously declines as production increases (within the relevant range). This is called economies of scale.

True

False

Question 2

The coefficient of determination or R squared, in regression analysis, should be less than 0.75 to indicate a strong cost equation.

True

False

Question 3

ABC Co. has fixed costs of $85,000. ABC wants to achieve an after-tax profit of $10,000. The selling price per unit is $100, and the variable cost per unit is $25. The company has a tax rate of 20%. How many units must ABC sell to acheive its after tax target profit goal?

Question 4

Advertising represents a variable cost.

True

False

Question 5

	The following is historical costs and usage for electricity costs: Electricity Cost Kilowatt Hours January $1500 2600 February $1200 1800 Using the high/low method, what is the projected fixed cost? Omit dollar signs and commas!

Question 6

Mixed costs have fixed and variable components.

True

False

Question 7

The relevant range represents where all cost assumptions remain valid.

True

False

Question 8

XYZ Company has fixed costs of $100,000. The selling price per unit is $80 and the variable cost per unit is $40. What is the break even sales dollars?

Omit dollar signs and commas!

Question 9

A step fixed costs represents a fixed cost that varies in direct proportion to the activity level

True

False

Question 10

Total fixed costs change in direct proportion to the level of production.

True

False