1. Which of the following statements is true concerning total variable costs?

a.	Total variable costs do not vary in total within the relevant range.
b.	Total variable costs vary in total in proportion to the activity level.
c.	Total variable costs vary in total in an inverse relationship with production.
d.	Total variable costs vary in total, but not in proportion to changes in the activity level.

2. Data for Cost A and Cost B are as follows:

	# of Units Produced	Total Cost
Cost A	1	$ 10
	10	100
	100	1,000
	# of Units	Per Unit Cost
Cost B	1	5,000
	10	500
	100	50

Which of the following best describes the behavior of Costs A and B?

a.	Cost A is fixed, Cost B is variable.
b.	Cost A is variable, Cost B is fixed.
c.	Both Cost A and Cost B are variable.
d.	Both Cost A and Cost B are fixed.

3. Which of the following is not one of the three major manufacturing cost categories?

a.	Direct materials costs that can be easily traced to a product
b.	Direct labor costs of workers who transform materials into finished products and whose time can be easily traced to a product
c.	Manufacturing overhead costs which represents all other manufacturing costs that do not fit into the other categories
d.	Opportunity costs which are the manufacturing costs forgone by accepting another production alternative