ACC 560 Week 5 Quiz 5

This pack of ACC 560 Week 5 Quiz 5 includes answers to the next questions:

1. An activity index identifies the activity that has a causal relationship with a particular cost.

2. A variable cost remains constant per unit at various levels of activity.

3. A fixed cost remains constant in total and on a per unit basis at various levels of activity.

4. If volume increases, all costs will increase.

5. If the activity index decreases, total variable costs will decrease proportionately.

6. Changes in the level of activity will cause unit variable and unit fixed costs to change in opposite directions.

7. For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

8. The relevant range of activity is the activity level where the firm will earn income.

9. Costs will not change in total within the relevant range of activity.

10. The high-low method is used in classifying a mixed cost into its variable and fixed elements.

11. A mixed cost has both selling and administrative cost elements.

12. The fixed cost element of a mixed cost is the cost of having a service available.

13. For planning purposes, mixed costs are generally grouped with fixed costs.

14. The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost.

15. When applying the high-low method, the variable cost element of a mixed cost is calculated before the fixed cost element.

16. An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

17. In CVP analysis, the term