1) 10% change in firm's revenues is probable to result in change of more than 10% in firm's operating income because:
i) Not all of firm's costs will change in proportion to revenue change
ii) Firm has financial leverage
iii) Contribution margin ratio will change in proportion to revenue change
iv) Only fixed expenses will change in proportion to the revenue change
2) Cost behaviour refers to:
i) Costs that are both good and bad
ii) costs that increase at a quicker rate than others
iii) costs that decrease at a quicker rate than others
iii) Costs that are variable or fixed
iv) None of the above
3) When high-low method of estimating a cost behaviour pattern is used:
i) Cost and volume data should be reviewed for outliers
ii) Direct result of high-low calculations is fixed expense amount
iii) Highest and lowest sales price and volume amounts are used in the calculation
iv) the resulting cost formula will explain total cost accurately for every value between the high and low volumes
4) Shift in \ amount of manufacturing overhead costs applied to mix of products made which happens when using single cost driver rate as compared to using activity-based costing rates is called as:
i) Under applied overhead
ii) Over applied overhead
iii) Cost absorption
iv) Cost distortion
5) Excess of cost of goods manufactured over cost of goods sold for period represents:
i) Increase in gross profit
ii) Decrease in work in process inventory
iii) Over applied manufacturing overhead
iv) Increase in finished goods inventory