Question

1. UNIS Let's start with an easy one! Which of the following wou with an easy one! Which of the following would most likely be a fixed cost for a Subway restaurant? a. Lettuce b. Fritos chips c. Turkey d. Coca-Cola e. Rent 2. A sunk cost is: a. a cost which can be shifted to the future with little effect on current operations. b. a cost which cannot be avoided because it has already been incurred. c. a cost which is relevant to the decision-making process. d. the potential earnings you give up to take a course. e. the amount you can sell your Managerial Accounting textbook for. 3. Which of the following would most likely be included as part of manufacturing overhead in the production of a luxury dining room table? a. The cost of a few nuts and bolts used in the table b. The cost of the red cedar wood used in the table c. The amount paid to the individual who spends four hours staining the red cedarwood d. The commission paid to the salesperson who sold the table e. Utilities for the store in which the table is sold 4. In determining the cost of a UGBA 102B course, the utilities of Chou Hall would be considered: a. sunk costs. b. opportunity costs. c. direct costs. d. indirect costs. e. irrelevant to setting tuition rates. A business produces a product that has associated variable cost and fixed costs. Assuming a business stays within the relevant range, if its level of sales increases: a. total contribution margin will change. b. variable cost per unit and total costs will increase. c. total variable costs will increase and fixed costs per unit will decrease. d. operating profit will increase. e. variable cost per unit will remain stable and total fixed cost will increase.

Answer 1

Answer with explanation is given below

1 Answer is Option e) Rent Rent is part of factory overheads and it will be fixed cost Rent paid every month will be same and hence it is fixed cost Other costs given are variable cost 2 Answer is Option b) A Sunk cost is a cost which has been incurred in the past and is not relevant for decision making A sunk cost is also irrelevant cost For example: Book value of fixed assets Hence answer is Option b) 3 Answer is Option a) Nuts and bolts cost form part of indirect material. Hence it is manufacturing overhead Option b) and c) form part of direct cost Option d) and e) form part of selling cost hence option a) is the answer Answer is Option d) The cost of utilities forms part of indirect costs since it is incurred in delivering the course Direct costs are costs which are directly incurred in product/service Indirect costs are part of cost in delivering the service Hence option is d) 5 Answer is Option c) Total variable cost will increase with increase in level of sales Fixed cost per unit will decrease since increased units reduces the cost per unit Hence answer is Option c) because Total variable cost will increase and fixed cost per unit will decrease