Fixed costs are costs that remain the same in total dollar amount as the activit

Question

Fixed costs are costs that remain the same in total dollar amount as the activity base changes. TRUE OR False

A relevant range is the range of activity over which the changes in the cost are of no interest. True or False

The break-even point is the level of operations at which the company has neither a loss nor a profit. True or False

As fixed costs increases, the break-even point increases. True or False

FIFO method refers to the fact that the first items in are the last items out. True or False

Mixed costs are costs that have characteristics of both a variable and fixed costs. True or False

An example of an activity base is units produced. True or False

As the unit selling price increases, the break-even point increases. True or False

The difference between contribution margin and operating leverage is fixed charges. True or False

Explanation / Answer

Fixed costs are costs that remain the same in total dollar amount as the activity base changes. TRUE OR False

Fixed costs are costs that remain the same in total dollar amount as the activity base changes. TRUE OR False

Ans Yes it is TRUE. Total fixed cost will remain same, however fixed cost per unit will change. A relevant range is the range of activity over which the changes in the cost are of no interest.  True or False Ans Yes it is TRUE The break-even point is the level of operations at which the company has neither a loss nor a profit.  True or False Ans Yes it is TRUE. At break even point Sales revenue-Variable cost = Fixed cost As fixed costs increases, the break-even point increases.  True or False Ans Yes it is TRUE. At break even point Sales revenue-Variable cost = Fixed cost. Therefore, if fixed cost increases to cover that increase brek even sales shall also be increased. FIFO method refers to the fact that the first items in are the last items out.  True or False Ans No it is FLSE. FIFO means First in First Out. It means first itemis are the first item out Note: Maximum questions can be asnwered are four

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