1 - Which one of the following statements is not true?

• Total fixed costs remain the same regardless of volume within the relevant range.

• Total variable costs change with volume.

• Total variable costs decrease as the volume increases.

• Fixed costs per unit increase as the volume decreases.

• Variable costs per unit remain the same regardless of the volume.

2 -

elect cost information for Klondike Corporation is as follows:

	1,000 units of output					2,000 units of output
	Total		Cost/Unit			Total		Cost/Unit
Direct materials	$	4,000	$	4.00		$	8,000	$	4.00
Rent expense	$	2,000	$	2.00		$	2,000	$	1.00

Based on this information:

Multiple Choice

• Both direct materials and rent expense are variable costs.

• Direct materials is a fixed cost and rent expense is a variable cost.

• Both direct materials and rent expense are fixed costs.

  Direct materials is a variable cost and rent expense is a fixed cost.

• Both direct materials and rent expense are mixed costs.