Question

- Mixed costs: a) Vary with production in direct proportion to volume b) Vary with production...

- Mixed costs:

a) Vary with production in direct proportion to volume

b) Vary with production but not in direct proportion to volume

c) Do not vary with production

d) Include only different types of fixed costs

-The relevant range is defined as:

a) The period of time over which costs do not change

b) The volume of production over which the cost assumptions hold

c) The volume of production over which step-wise fixed costs increase

d) The time period in which the level of production does not change

- Which of the following is not an assumption when estimating a cost function over the relevant range of activity?

a) Mixed costs will change in total

b) Mixed costs will change per unit

c) Variable costs will be constant in total

d) Fixed costs will be constant in total.

- Paula’s Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is cost per day of boarding, which of the following is a direct cost?

a) Pet food

b) Front office staff salaries

c) Grooming supplies

d) Depreciation on shelving and equipment used in the grooming and retail area

- Fixed costs per unit:

a) Vary inversely with changes in volume

b) Change regardless of changes in volume

c) Will not change over the relevant range

d) Increase with an increase in volume

Business   Operations-Management   
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Homework Answers

Answer #1

1. The correct option is b) Vary with production but not in direct proportion to volume as mixed cost does not depend on volume.

2. The correct option is b) The volume of production over which the cost assumptions hold as reletive range is the range in which cost assumptions hold true a given set of volume of production

3. The correct option is c) Variable costs will be constant in total as variable cost can't be constant.

4. The correct option is a) Pet food as pet store will incur direct cost

5. The correct option is a) Vary inversely with changes in volume as fixed cost increases as the volume increases.

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