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Cost behavior pattern data, increase in fixed costs, contribution margin ratio

4. Simplifying assumptions made when using cost behavior pattern data include:
a. relevant range and linearity.
b. fixed activity and linearity.
c. activity range and variability.
d. relevant range and liquidity.

5. Cost behavior refers to:
a. costs that are both good and bad.
b. costs that increase at a quicker rate than others.
c. costs that decrease at a quicker rate than others.
d. costs that are variable or fixed.
e. none of the above.

6. If fixed costs were increased by $9,000 and the contribution margin ratio remained at 30 percent, then sales must increase by $_________ in order to cover the additional fixed expenses:
a. $33,000
b. $30,000
c. $27,000
d. $54,000

Solution Preview

4. a. relevant range and linearity
We assume that the activity would be within a range ...