1. An example of a cost that is likely to have a variable cost behavior pattern is:

salespersons' salaries

depreciation of plant equiptment

property taxes

materials used in production

2. ABC Company's sales are $100,000, fixed costs are $50,000, and variable costs are $30,000. ABC Company's contribution margin and operating income are __________ and __________ respectively.

50,000; 20,000

20,000; 70,000

70,000; 50,000

70,000; 20,000

3. When using a cost formula to determine total expected costs for cost items having a mixed (semi-variable) cost behavior pattern, total costs are expected to decrease and per unit variable costs are expected to:

increase as the level of activity increases.

decrease as the level of activity decreases.

decrease as the level of activity increases.

remain constant as the level of activity decreases.