1		Which of the following best describes the relationship between total fixed costs and total variable costs as total volume decreases?
			A)	Total fixed costs stay the same and total variable costs stay the same.
			B)	Total fixed costs decrease and total variable costs stay the same.
			C)	Total fixed costs stay the same and total variable costs decrease.
			D)	Total fixed costs decrease and total variable costs decrease.
2		Which of the following best describes the relationship between fixed cost per unit and variable cost per unit as total volume increases?
			A)	Fixed cost per unit stays the same and variable cost per unit stays the same.
			B)	Fixed cost per unit stays the same and variable cost per unit increases.
			C)	Fixed cost per unit increases and variable cost per unit increases.
			D)	Fixed cost per unit decreases and variable cost per unit stays the same.
3		2005 2006 Units 2,600 3,000 Total Cost $17,550 $20,250 The above results represent what kind of cost behavior?
			A)	Fixed cost
			B)	Opportunity cost
			C)	Mixed cost
			D)	Variable cost

Use the following information to answer questions 4 - 6.

4		Between 2005 and 2006 the number of ticket sold increased by what percentage?
			A)	500%
			B)	600%
			C)	25%
			D)	24%
5		The cost of rental equipment behaves as a:
			A)	fixed cost.
			B)	variable cost.
			C)	mixed cost.
			D)	total cost.
6		Between 2007 and 2008 the gross profit changed by what percentage?
			A)	8.3%
			B)	(8.3)%
			C)	7.7%
			D)	(7.7)%
7		Which of the following represents the best definition of contribution margin?
			A)	Difference between fixed costs and variable costs.
			B)	Difference between revenue and fixed costs.
			C)	Amount available to cover fixed costs and provide for profit.
			D)	Amount available to cover variable costs.

Use the following information to answer questions 8 - 11.

8		Assume all of the companies charge the same sales price per unit. If sales volume increases 20%, which company would have the largest profit?
			A)	Co. A
			B)	Co. B
			C)	Co. C
			D)	Co. D
9		Assume all of the companies charge the same sales price per unit. If sales volume decreases 10%, which company would have the largest profit?
			A)	Co. A
			B)	Co. B
			C)	Co. C
			D)	Co. D
10		If the sales price per unit is $100 and 2,000 units are sold, which company exhibits the highest magnitude of operating leverage?
			A)	Co. A
			B)	Co. B
			C)	Co. C
			D)	Co. D
11		If the price dropped from $100 to $24, which company has the competitive operating advantage to attract all 8,000 units of volume in the market?
			A)	Co. A
			B)	Co. B
			C)	Co. C
			D)	Co. D
12		The range of activity over which the definitions of fixed and variable costs are applicable is referred to as the:
			A)	activity base.
			B)	relevant range.
			C)	average cost.
			D)	operating range.

Use the following information to answer questions 13 - 16.

A local church wants to rent a hall for $3,000 a day to hold a bingo fundraiser. Every session of bingo requires a caller who costs $200. There are supplies that are needed that cost $3 per person playing bingo. On average each bingo player spends $20 and 1,000 people attend each session. $10,000 in prizes is awarded each session.

13		Total costs for one session of bingo can be classified as: Total Fixed Costs Total Variable Costs
			A)	$13,200 $3
			B)	$ 3,000 $13,200
			C)	$13,200 $ 3,000
			D)	$10,000 $ 3,200
14		If the church holds 12 bingo sessions a year and 1,000 people attend each session, the average cost per session is:
			A)	$9,600.
			B)	$14,700.
			C)	$15,200.
			D)	$16,200.
15		The church is considering holding two bingo sessions on the same day with 1,000 people attending each session. If the church had bingo once a month with two sessions per day, then the average cost per session is:
			A)	$ 9,600.
			B)	$14,700.
			C)	$15,200.
			D)	$16,200.
16		Which of the costs is fixed relative to the number of sessions held per day?
			A)	Supplies
			B)	Hall rental
			C)	Caller’s salary
			D)	Prize money

Use the following information to answer questions 17 - 19. Assume that the units represent the low and high points in a set of data used to estimate fixed and variable costs.

	2005	2006
Units	2,600	3,000
Total Cost	$ 22,500	$ 25,500

17		The above results demonstrate what form of cost behavior?
			A)	Fixed cost
			B)	Variable cost
			C)	Mixed cost
			D)	Opportunity cost
18		Using the high-low method, what is the estimated variable cost per unit?
			A)	$8.65
			B)	$8.57
			C)	$8.50
			D)	$7.50
19		Using the high-low method, what is the estimated total fixed costs?
			A)	$25,500
			B)	$22,500
			C)	$3,000
			D)	$6,000
20		All of the following techniques are used by accountants to divide a mixed cost into fixed and variable cost components except:
			A)	least-squares regression analysis.
			B)	high-low method.
			C)	scattergraph method.
			D)	operating leverage approach.

Use the following information to answer questions 21 - 25.

	Units Sold ($60 sales price/unit)
	100	200	300
Total Salary	$2,000	$3,000	$4,000
Total cost of goods sold	$1,500	$3,000	$4,500
Cost/unit of depreciation	$30	$15	$10
Total rent	$2,000	$2,000	$2,000

21		Which of the above costs behaves as a variable cost?
			A)	Rent
			B)	Salary
			C)	Cost of goods sold
			D)	Depreciation
22		Which of the above costs behaves as a mixed cost?
			A)	Rent
			B)	Salary
			C)	Cost of goods sold
			D)	Depreciation
23		Which of the above costs does not contain any fixed cost component?
			A)	Rent
			B)	Salary
			C)	Cost of goods sold
			D)	Depreciation
24		If 300 units are sold what is the contribution margin? (Hint: use the high-low method to separate the mixed salary cost into its fixed and variable components).
			A)	$ 7,500
			B)	$10,500
			C)	$13,500
			D)	$18,000
25		What is the total fixed cost?
			A)	$5,000
			B)	$6,000
			C)	$6,010
			D)	$9,000