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# The annual insurance premium for a factory building would be a:

a. Fixed cost; period cost; and direct cost with regard to units of product
b. Fixed cost; product cost; direct cost with regard to units of product
c. Variable cost; product cost; direct cost with regard to units of product
d. Fixed cost; product cost; indirect with regard to units of product

A company pays a sales commission of 5% on each unit sold. If a graph is prepared, with the vertical axis
representing per-unit cost and the horizontal axis representing unit sales, how would a line that
depicts sales commission be drawn?

## a. As a straight diagonal line, sloping upward to the right

b. As a straight diagonal line, sloping downward to the right
c. As a horizontal line
d. As a vertical line

## a. Increase c. Remains constant

b. Decrease d. Increase or remain constant, but never decrease

A cost estimation method in which a cost line is fit using exactly two data points.

## a. Least-squares regression method c. Scatter-diagram method

b. Account analysis d. High-low method

A data point that falls away from other data points in a scatter diagram is called a (an)

## a. Outlier c. Standard deviation

b. Margin of error d. Coefficient of determination

## a. Product level that is equal to sales

b. Volume of operations in order to break-even
c. Variable costs necessary equal fixed costs
d. Relationship between revenues and cost at various levels of operation

The slope of the cost line does not in any way affect

## a. Fixed cost c. Break-even peso sales

b. Margin of safety d. Degree of operating leverage

If the degree of operating leverage is 4, then a 1% change in quantity sold should result in a 4% change
in

## a. Contribution margin c. Post- tax income

b. Revenue d. Pre-tax income

## a. Company A is less risky

b. Company B is less profitable
c. Company A has higher fixed operating expense
d. Company As profit are more sensitive to percentage changes in sales

Under variable costing income statement, the difference between the contribution margin and
income before income tax is equal to the

## a. Total fixed cost c. Total operating expenses

b. Total variable d. Fixed selling administrative expenses

In determining the lowest price that can be quoted for a special order that will use idle capacity within a
production, the best method to use is

## a. Process costing c. Job order costing

b. Variable costing d. Absorption costing

In a decision-making case, which of the following cost is NOT likely to contain a relevant cost opponent?

## a. Labor cost c. Factory overhead cost

b. Selling cost d. Depreciation cost of an existing asset

## a. Cost to purchase c. Relevant cost to make

b. Total cost to make d. Variable manufacturing cost

Comparing actual result with s budget base on achieved (actual) volume is possible with the use of a

## a. Monthly budget c. Rolling budget

b. Master budget d. Flexible budget

The difference between the actual amounts and the flexible budget amount for the actual output
achieved is the

## a. Production volume variance c. Sales volume variance

b. Flexible budget variance d. Standard cost variance

## a. Start from a base zero {zero-based budgeting}

b. Requires a manager to justify the entire budget for each year {zero-based budgeting}
c. Simply adjust the current years budget to allow for changes planned for the coming year
d. Eliminates the need to review all function periodically optimum use of resources

## a. Which emphasizes the cost of activities {activity-based budget}

b. Which summarizes all of a companys budget and plan {master budget}
c. Which requires each manager to justify the units entire budget each period {zero-based budget}
d. In which estimates of revenue and expenses are prepare for each product beginning with the
products research and development phase and traced through its customer support phase