1.

Unit variable costs are costs that change in direct proportion to changes in the activity level (True or
False)
2. Consider the following graphic representation of certain costs:
Costs (P)

Units
Which of the following costs are most likely represented by the graph?
a. Total fixed costs and total variable costs
b. Total fixed costs and unit variable costs
c. Unit fixed costs and the total variable costs
d. Unit fixed costs and unit variable costs
3. In costs analysis the line equation Y = a + bx, total fixed cost (a) is regarded as the
a. Independent variable c. Slope of the line
b. Dependent variable d. Y-axis intercept
4. Using statistical technique gives the most mathematically precise cost estimate?
a. Scatter-diagram method
b. Least-square method
c. High-low method
d. Calendar method
5. Hunger company has estimated the following cost formulas for overhead
Cost Formula
Lubricants P1,500 plus P0.50 per machine-hour
Utilities P2,000 plus P0.60 per machine-hour
Depreciation P1,000
Maintenance P200 plus P0.10 per machine-hour
Machine set-up P0.30 per machine-hour
Based on the cost formulas, what is the total expected overhead cost at 300 machine hours?
a. P4,700 b. P4,950 c. P5,000 d. P5,150
6. Which of the following statements is true?
a. The higher is the production within the relevant range, the higher is the variable cost per unit
b. The higher the production within the relevant range, the higher is the fixed cost per unit
c. The lower is the production within the relevant range the lower is the total fixed cost
d. The lower is the production within the relevant range, the lower is the total variable cost
7. As volume increases
a. Total fixed costs remain constant and per-unit fixed costs remain constant
b. Total fixed costs remain constant and per-unit fixed costs decrease
c. Total fixed costs remain constant and per-unit fixed costs increase
d. Total fixed costs increase and per-unit fixed costs increase
8. Within the relevant range, the amount of variable cost per unit
a. Differs at each production level c. Decreases as production increases
b. Increases as production increases d. Remains constant at each production level
9. What are fixed costs that cannot be reduced or avoided within a short period of time?
a. Committed b. Variable c. Avoidable d. Unnecessary
10. What would be an example of a discretionary fixed cost?
a. Depreciation on equipment c. Salaries of top management
b. Rent on factory building d. Research and development
11. Which of the following is not a method of splitting a semi-variable cost?
a. High and low point c. Scatter chart
b. Method of least squares d. Linear programming
12. Mockingbird Company applies the high-low method of cost estimation to customer order data for the first
4 months of 2015:
Month Orders Cost (P)
 January 1,200 3,120.00
February 1,300 3,185.00
March 1,800 4,320.00
April 1,700 3,895.00
What is the estimated variable cost component per order?
a. P2.00 b. P2.42 C. P2.48 D. P2.50
13. Dawn Company estimated its materials handling cost at two activity levels as follows:
Kilos Handled Cost (P)
80,000 160,000
60,000 132,000
What is Dawn’s estimated cost for handling 75,000 kilos?
a. P150,000 b. P153,000 c. P157,500 d. P165,000
14. In March, Starbox has electrical costs of P225.00 when the total volume was 4,500 cups of coffee served.
In April, electrical costs were P227.50 for P4,750 cups of coffee. Using the high-low method, what is the
estimated fixed cost of electricity per year?
a. P180 b. P200 c. P225 d. P2,160
15. Night Inc. uses high-low method to derive the cost formula for electrical power cost. According to cost
formula, the variable cost per unit of activity is P3 machine hour. Total electrical power cost at the high
level of activity was P7,600 and the low level of activity was P7,300. If the high level of activity was 1,200
machine hours, then what was the low level of the activity
a. 800 machine-hours c. 1,000 machine-hours
b. 900 machine-hours d. 1,100 machine hours
16. Black company has an average unit cost of P45 at 10,000 units and P25 at 30,000 units. What is the unit
variable cost?
a. P10.00
b. P15.00
c. P20.00
d. An amount that cannot be determined without more information
17. Total production costs of prior periods for a company are listed below. Assume that the same cost
behavior patterns can be extended linearly over the range of 3,000 to 35,000 units and that the cost
driver for each product is the number of units produced:
Production per month (units) 3,000 9,000 16,000 35,000
Product X 23,700 52,680 86,490 178,260
Product Y 47,280 141,840 252,160 551,600
What is the average cost per unit at a production level at level of 8,000 units for product X?
a. P7.90 b. P5.98 c. P5.85 d. P4.83
18. When unit production decreases, the average product cost per unit increases. This increase in the
average cost per unit is due to the
a. Increase in the total variable costs c. Increase in the unit variable cost
b. Increase in the total fixed costs d. increase in the unit fixed cost
19. White manufactures provided you with the following flexible budget of factory overhead at three
different capacity levels:
Capacity Factory Overhead
60% 98,000.00
70% 106,000.00
85% 118,000.00
What will be the flexible budget of factory overhead at 90% capacity?
a. P112,000 b. P122,000 c. P130,000 d. P132,000
20. The fixed cost of a semi-variable cost is comparable to the mathematical concept of
a. Y-intercept b. Slope of the line c. Dependent variable d. Independent variable