Reference no: EM132787456
Problem 1: Which costs will change with a decrease in activity within the relevant range?
A. Total fixed costs and total variable cost.
B. Unit fixed costs and total variable cost.
C. Unit variable cost and unit fixed cost.
D. Unit fixed cost and total fixed cost.
Problem 2: A disadvantage of the high-low method of cost analysis is that:
A. it cannot be used when there are a very large number of observations.
B. it is too time consuming to apply.
C. it uses two extreme data points, which may not be representative of normal conditions.
D. it relies totally on the judgment of the person performing the cost analysis.
Problem 3: At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600. Using the high-low method, the cost formula for maintenance is:
A. $1.20 per unit
B. $1.16 per unit
C. $1,200 plus $1.10 per unit
D. $600 plus $1.10 per unit
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