QUESTION 2

A retail organization pays its employees a commission of 3 percent on each sale. What is the proper classification of the cost of sales commissions?

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

QUESTION 3

SolCo manufactures and sells solar water systems. Because of current trends, it expects sales to increase by 20 percent next year. If this expected level of production and sales is within SolCo's relevant range, how should this increase affect next year's total amounts for the following costs? Variable => Fixed => Mixed

	A.	no change => no change => increase
	B.	decrease => increase => increase
	C.	increase => no change => increase
	D.	increase => increase => increase

QUESTION 4

C-V-P analysis does not apply to service industries.

True

False

QUESTION 8

A contribution margin cannot occur until the breakeven point has been surpassed.

True

False

QUESTION 9

A taxi fare with a base price plus a mileage charge would be an example of a

	A.	fixed cost.
	B.	variable cost.
	C.	mixed cost.
	D.	standard cost.

QUESTION 10

Product AB has a suggested selling price of $27 per unit and a projected variable cost per unit of $15. Fixed costs are expected to increase by $197,040 per month. The breakeven point in sales units per month is

	A.	16,240.
	B.	11,590.
	C.	11,950.
	D.	16,420.

QUESTION 11

Which of the following statements is true regarding fixed and variable costs?

	A.	Fixed costs are constant in total, and variable costs are constant per unit.
	B.	Both costs are constant when considered on a per unit basis.
	C.	Both costs are constant when considered on a total basis.
	D.	Variable costs are constant in total, and fixed costs are constant per unit.

QUESTION 12

If an unprofitable segment is eliminated

	A.	it is impossible for net income to decrease.
	B.	fixed expenses allocated to the eliminated segment will be eliminated.
	C.	variable expenses of the eliminated segment will be eliminated.
	D.	it is impossible for net income to increase.