Question

Please answer these tricky question(multiple choices)

- Which of the following is an element of an operating plan?

a) Developing an organizational mission

b) Preparing financial statements .

c) Defining core values

d) Budgeting employee costs

- Mixed costs:

a) Vary with production in direct proportion to volume

b) Vary with production but not in direct proportion to volume

c) Do not vary with production

d) Include only different types of fixed costs

- Which of the following is not an assumption when estimating a cost function over the relevant range of activity?

a) Mixed costs will change in total

b) Mixed costs will change per unit

c) Variable costs will be constant in total

d) Fixed costs will be constant in total.

- Paula’s Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is cost per day of boarding, which of the following is a direct cost?

a) Pet food

b) Front office staff salaries

c) Grooming supplies

d) Depreciation on shelving and equipment used in the grooming and retail area

- Fixed costs per unit:

a) Vary inversely with changes in volume

b) Change regardless of changes in volume

c) Will not change over the relevant range

d) Increase with an increase in volume

- What is the relationship between the margin of safety percentage and the degree of operating leverage?

a) They are unrelated

b) They are always the same

c) They are reciprocals

d) They are both subject to management bias

- At the breakeven point:

a) Sales will be equal to variable costs plus target profit

b) Sales will be equal to variable costs plus fixed costs

c) Sales will be equal to fixed costs plus target profit

d) Fixed costs will be equal to variable costs

Answer 1

Question:  Which of the following is an element of an operating plan?

Answer: There are Six key elements of operating planning. Developing of organizational mission is one of them. So the right answer is:

a) Developing an organization mission.

Question:  Mixed costs:

Answer: The mixed cost is the mixed of Fixed and Variable Cost. The example of this type of cost is Insurance, Depreciation etc. This is lso known as semi variable expenses. The fixed portion is remain fixed and the variable portion is vary with the number of production. So the correct answer is:

b) Vary with production but not in direct proportion to volume

Question: Which of the following is not an assumption when estimating a cost function over the relevant range of activity?

Answer: The correct answer is:

c) Variable costs will be constant in total

The variable cost is changed with the activity level. The increase in production will increase the variable cost. So the assumption of variable cost will be constant is wrong.

Question: Paula’s Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is cost per day of boarding, which of the following is a direct cost?

Answer: The main business is boarding, grooming, and obedience training. So the cost associated with the same will be treated as direct cost. So the correct answer is:

c) Grooming Supplies

Question: Fixed costs per unit

Answer: The correct answer is:

a) Vary inversely with changes in volume

The total fixed cost will remain same. So if the production units are increased then the fixed cost per units will be decreased and vice versa.

Question: What is the relationship between the margin of safety percentage and the degree of operating leverage?

Answer: If margin of safety and operating leverage are related. There are reciprocal s relation exist between this two. So the correct answer is:

c) They are reciprocals

Question: At the breakeven point:

Answer: At the break even point there is no profit and no loss. It means at the break even point total sales is equal to total variable and fixed cost. So the correct answer is:

b) Sales will be equal to variable costs plus fixed costs.