1. Which of the following statements is false with respect to committed fixed costs?

Multiple Choice

• They represent organizational investments with a multiyear planning horizon.

• They should not be reduced for short periods of time because the costs of restoring them later would most likely exceed any cost savings realized in the short term.

• They usually arise from annual decisions by management to spend on certain fixed cost items.

• They remain constant, in total, regardless of changes in the level of activity within the relevant range.

2. Which of the following statements is false when considering cost behavior within the relevant range?

Multiple Choice

• A variable cost varies, in total, in direct proportion to changes in the level of activity.

• A variable cost is constant if expressed on a per unit basis.

• A fixed cost remains constant, in total, regardless of changes in the level of activity.

• The average fixed cost per unit increases as the level of activity increases.

3. Assume the following information for a merchandising company:

Number of units sold		20,000
Selling price per unit	$	30
Variable selling expense per unit	$	3
Variable administrative expense per unit	$	2
Fixed administrative expenses	$	50,000
Beginning merchandise inventory	$	24,000
Ending merchandise inventory	$	19,000
Merchandise purchases	$	340,000

What is the gross margin?Multiple Choice

• $155,000

• $265,000

• $255,000

• $260,000

4. A company's relevant range of production is 10,000 to 15,000 units. When it produces and sells 12,000 units, its unit costs are as follows:

	Amount per Unit
Direct materials	$	7.00
Direct labor	$	4.00
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	5.00
Fixed selling expense	$	3.50
Fixed administrative expense	$	2.00
Sales commissions	$	1.00
Variable administrative expense	$	0.50

If the company produces 15,000 units, what is the average fixed manufacturing cost per unit produced?

Multiple Choice

• $4.00

• $5.00

• $8.40

• $5.20

5. Assume the following information:

Direct materials					$	70,000
Direct labor					$	48,000
Variable manufacturing overhead	$	13,000
Fixed manufacturing overhead		25,000
Total manufacturing overhead					$	38,000
Variable selling expense	$	15,000
Fixed selling expense		20,000
Total selling expense					$	35,000
Variable administrative expense	$	8,000
Fixed administrative expense		12,000
Total administrative expense					$	20,000

What is the total variable manufacturing cost?

rev: 06_09_2020_QC_CS-208650

Multiple Choice

• $118,000

• $146,000

• $131,000

• $36,000