000 1. Describe the behaviour of a variable cost. 2. Describe the behaviour of a fixed cost. 3. Describe the behaviour of sales revenue. 4. Define and describe the contribution margin. 5. Define and describe the contribution margin ratio. 6. How can the contribution margin be used in decision making? 7. How can the contribution margin ratio be used in decision making? 8. How can the weighted average contribution margin ratio be used in deci sion making? 9. Are the cost behaviour assumptions of the CVP model reasonable or unreasonable? 10 Describe how you would deal with a mixed cost. 11. Can you change one variable in a CVP situation without changing some- thing else? 12. Define and describe the operating leverage. Problems 1. The Bight is a major Canadian department store. For each of the follow- ing costs, state whether you think it would be a variable cost, a mixed cost, or a fixed cost. (a) Store rent (b) Store utilities (c) Sales commissions (d) Wages of assembly line workers (e) Cleaning (f) Cost of goods sold of a merchandiser (g) Manager's salary (h) Human resources department costs (i) Advertising 2. West York General Hospital is trying to get a better idea of its costs. Tak- ing "patient days" as its measure of activity, for each of the following costs, state whether you think it would be a variable cost, a mixed cost, or a fixed cost: (a) Patients' food (b) Lawn mowing & groundskeeping (c) Laundry (d) Bandages & dressings (e) Nurses' salaries (f) Utilities (g) Ambulance services 3. The Wheatstone Co. has a variable cost rate of $25 per unit produced and a fixed cost of $100,000 per month.