1. Cool Runnings operates a chain of frozen yogurt shops. The company pays $5,000 of rent expense per month for each shop. The managers of each shop are paid a salary of $3,000 per month and all other employees are paid on an hourly basis. Relative to the number of yogurt shops the company runs, the cost of rent is which kind of cost?

   	A.	Opportunity cost
   	B.	Variable cost
   	C.	Fixed cost
   	D.	Mixed cost

6 points

QUESTION 8

1. Executive management at Shoeshiners Incorporated is very optimistic about the chain's ability to achieve significant increases in sales in each of the next five years. The company will generate the most net income if management creates a:

   	A.	medium operating leverage cost structure.
   	B.	high operating leverage cost structure.
   	C.	no operating leverage cost structure.
   	D.	low operating leverage cost structure.

6 points

QUESTION 9

1. Select the incorrect statement regarding upstream and downstream costs.

   	A.	To be profitable, companies must recover the total cost of developing, producing, and delivering products.
   	B.	Upstream and downstream costs are reported as product costs on the income statement.
   	C.	Companies normally incur significant downstream costs.
   	D.	Pricing decisions must consider both upstream and downstream costs in addition to manufacturing costs.