Question

Mediation MCQ (20 Marks) Important. No answer will be considered without sunnattint calculation needed Leements as Sewuiture for $100 which is an expira 1) Which one of the following costs changes per unit by the changes in volume? A) Variable cost 1) Fixed cost D) Total production cost C) Mixed cost Prepare the fol 2019 1. Collection will be col (ACCOUNT 2) Variable cost per unit will A) increase as production increase C) remain the same as production levels change B) decrease as production decreases. D) decrease as production increases. 2- 3) Total Fixed cost will: A) increase as production increases. C) remain the same as production levels change. B) Increase os production decreases D) Increase as production decreases. 4) Which of the following is considered one of the budgeting benefits? A) Budgeting demands integrated input from different business units and functions. B) Budgeting requires close cooperation between suppliers and creditors. C) Budget figures are used to evaluate the performance of investors. D) All of the above. 5) If the selling price per unit equals $ 200 and contribution ratio is 80%, how much is the variable cost per unit and ratio? A) Variable cost per unit is $ 40 and variable cost ratio is 20%. B) Variable cost per unit is $ 24 and variable cost ratio is 20%. C) Variable cost per unit is $ 40 and variable cost ratio is 80%. D) Variable cost per unit is $ 24 and variable cost ratio is 80%. 6) The relevant range can be defined as: A) The range of volume where total fixed costs remain constant and total variable costs remain variable. B) The range of volume where total variable costs remain variable and fixed cost per unit remains variable. C) The range of volume where total fixed costs remain constant and fixed cost per unit remains variable. D) The range of volume where total fixed costs remain constant and variable cost per unit remains constant

answer with an explanation

Answer 1

Solution 1) Which one of the following costs changes per unit by the change in volume.

Correct Option is Option B - Fixed Cost

Explanation: As the total fixed cost remains the same, the per unit fixed cost will decrease with an increase in output as the fixed cost is distributed among larger number of units.

Solution 2): Variable cost per unit will:

Correct Option is Option C - Remains the same as production levels change.

Explanation: Variable cost per unit will remain the same. However, the total variable cost will change with the change in output.

Solution 3): Total fixed cost will:

Correct Option is Option C - Remains the same as production levels change.

Explanation: Fixed costs will remain the same irrespective of the output. However, the Fixed cost per unit will increase with the decrease in output and it will decrease with an increase in output.

Solution 4) Which of the following is considered one of the budgeting benefits:

Correct Option is Option A - Budgeting integrated inputs from different business units and functions.

Explanation: Budgeting requires close cooperation between suppliers and the company, so the company could incorporate the accurate time for making the payment to the suppliers. Secondly, budget figures are used to evaluate the performance of managers and not the investors.

Solution 5) If the selling price per unit equals $200 and contribution ratio is 80%, how much is variable cosy per unit and ratio.

Correct Option is Option A - Variable cost per unit is $40 and Variable cost ratio is 20%

Explanation: Contribution ratio = Contribution  / Sales

Therefore, 0.8 = Contribution / 200

Therefore, Contribution = 200 x 0.8 = $160

Variable cost per unit = Sales - Contribution = $200 - $160 = $40

Variable cost ratio = Variable cost / Sales x 100 = (40 / 200) x 100 = 20%

Solution 6) The relevant range can be defined as :

  Correct Option is Option D) The range of volume where total fixed costs remain constant and variable cost per unit remains constant

Explanation: With an increase in output the total variable cost increases but in a lesser proportion because of the discounts offered on bulk orders. Therefore, the range of volume is where total fixed costs remain constant and variable cost per unit remains constant as for that range discounts on bulk order is not applicable.

Answer 2

Which of the following cost is used in the calculations of cost per unit