2-8 Managers often assume a strictly linear relationship between cost and volume. How can this practice be defended in light of the fact that many costs are curvilinear?
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Question 18
What kind of effect on fixed costs per unit do changes in activity have?
a. Positive | |
b. Negative | |
c. Inverse | |
d. Neutral |
Question 19
A division sold 200,000 calculators during 2017:
Sales $2,000,000
Variable costs:
Materials $380,000
Order processing 150,000
Billing labor 110,000
Selling expenses 60,000
Total variable costs 700,000
Fixed costs 1,000,000
How much is the unit contribution margin?
a. $1.00 | |
b. $3.50 | |
c. $6.50 | |
d. $8.50 |
Question 20
Which of the following is an implausible explanation of why variable costs often behave in a curvilinear fashion?
a. Labor specialization | |
b. Overtime wages | |
c. Total variable costs are constant within the relevant range | |
d. Availability of quantity discounts |
Question 21
Which of the following would be the least controllable fixed costs?
a. Property taxes | |
b. Rent | |
c. Research and development | |
d. Management training programs |