1) Which of the following is most likely a fixed cost?
A) Income taxes,
B) The cost of merchandise sold,
C) Depreciation taken on equipment,
D) The cost of commissioned sales people,
E) All of the above.
2) Which of the following is most likely a variable cost?
A) Depreciation taken on an office building,
B) Wages for production workers,
C) Interest on corporate bonds,
D) Rent on an office building,
E) None of the above.
3) In the long run,
A) All costs are fixed.
B) All costs are mixed.
C) All costs are variable.
D) Paying a monthly ‘budget’ amount for utilities is a fixed cost.
4) The goal of breakeven analysis is to
A) avoid paying taxes,
B) earn as much as your competitors,
C) set variable costs equal to fixed costs,
D) determine long-term investment levels,
E) determine the minimum volume of business to avoid a loss.
5) The use of operating leverage
A) requires a teeter totter to be installed in the office,
B) requires the firm to have only variable costs,
C) increases the breakeven level,
D) eliminates all fixed costs,
E) none of the above.
6) Operating leverage is
A) Always bad
B) Always good
C) Good, when the economy is bad
D) Good when the economy is good
7) Comparing a capitates environment to a fee-for-service environment; in a capitates environment
A) each additional visit creates costs without a corresponding increase in revenues,
B) the total revenues line on a CVP graph is flat rather than upward sloping,
C) less utilization rather than more utilization enhances profitability,
D) providers of health services also take on an insurance function,
E) all of the above.
8) Which costs are generally not allocated?
A) fixed costs
B) direct costs
C) variable costs
D) indirect costs
E) none of the above
9) In a multi-service facility, which of the following is direct cost?
A) Electricity,
B) Custodial services,
C) Depreciation on the building,
D) Nurse pay in one department,
E) All of the above are direct costs.