Question 1.1. Which of the following must be true for an activity base to be useful in cost behavior analysis? (Points : 3)

the activity should always be stated in dollars. there should be a correlation between changes in the level of activity and changes in costs. the activity should always be stated in terms of units. the activity level should be constant over a period of time.

Question 2.2. A variable cost is a cost that does what? (Points : 3)

varies per unit at every level of activity. occurs at various times during the year. varies in total in proportion to changes in the level of activity. may or may not be incurred, depending on management's discretion.

Question 3.3. What is a cost which remains constant per unit at various levels of activity? (Points : 3)

variable cost. fixed cost. mixed cost. manufacturing cost.

Question 4.4. Two costs at Simpson, Inc. appear below for specific months of operation.

Delivery costs	January	$40,000	40,000
	February	$55,000	60,000
Utilities	January	$84,000	40,000
	February	$126,000	60,000

Which type of costs are these? (Points : 3)

Delivery costs and utilities are both variable Delivery costs and utilities are both mixed Utilities are mixed and delivery costs are variable Delivery costs are mixed and utilities are variable

Question 5.5. An increase in the level of activity will have what effects on unit costs for variable and fixed costs? Unit Variable Cost/Unit Fixed Cost (Points : 3)

Increases / Decreases Remains constant / Remains constant Decreases / Remains constant Remains constant / Decreases