33. An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

Unit Variable Cost Unit Fixed Cost

a. Increases Decreases

b. Remains constant Remains constant

c. Decreases Remains constant

d. Remains constant Decreases

D

34. ABC Company has three products that use common facilities. The relevant data concerning these three products follows:

Product	A	B	C	Total
Sales	$10,000	$30,000	$40,000	$80,000
Variable costs	5,000	20,000	25,000	50,000
Contribution Margin	5,000	10,000	15,000	30,000
Fixed cost	5,000	15,000	30,000	50,000
Operating loss	0	-$ 5,000	-$15,000	-$20,000

Fixed costs are allocated common costs. If product line C is dropped, what will be the impact on operating profits?

a.	Operating loss will decrease to ($15,000).
b.	Operating loss will decrease to ($5,000).
c.	Operating loss will increase to ($35,000).
d.	There would be no change in operating profits.

35. Which of the following is not a step in activity based costing?

a. Identify the departments that consume resources and assign costs to those departments.

b. Identify the cost drivers associated with each activity.

c. Compute a cost rate per cost driver unit.

d. Assign cost to products by multiplying the cost driver rate times the volume of cost driver consumed by the product.

B

36. Differences occur between resources supplied and resources used because

a. management is utilizing company resources appropriately.

b. managers have committed to supply a certain level of resources before actually using them.

c. cross-functional teams are not as productive in certain cultures

d. management has not properly categorized costs incurred according to the cost hierarchy.

37. In producing joint products, which are the relevant costs for decisions to sell or process further?

a.	Costs incurred up to the splitoff point
b.	Costs incurred after the splitoff point
c.	Joint costs
d.	Sunk costs