ASU ACC 241 Exam 2 (Fisher) with
complete solutions
What is cost behavior? - correct answer ✔✔ a behavior that describes how costs change as
volume changes
*managers must understand in order to make good decisions and accurate projections
What are the 3 most common cost behaviors? - correct answer ✔✔ 1. Variable cost
2. Fixed cost
3. Mixed costs
What is variable cost? - correct answer ✔✔ - cost incurred for every unity of activity. As a result,
total variable cost change in direct proportion to changes in volume.
- costs that are incurred for every unit of volume
Ex. Hotels that provide complimentary toiletries
T/F: If volume increases, then total variable cost will also increase. - correct answer ✔✔ True
Explanation: total variable costs change in direct proportion to changes in volume
What is a cost equation? - correct answer ✔✔ a mathematical equation for a straight line to
express how a cost behaves
complete solutions
What is cost behavior? - correct answer ✔✔ a behavior that describes how costs change as
volume changes
*managers must understand in order to make good decisions and accurate projections
What are the 3 most common cost behaviors? - correct answer ✔✔ 1. Variable cost
2. Fixed cost
3. Mixed costs
What is variable cost? - correct answer ✔✔ - cost incurred for every unity of activity. As a result,
total variable cost change in direct proportion to changes in volume.
- costs that are incurred for every unit of volume
Ex. Hotels that provide complimentary toiletries
T/F: If volume increases, then total variable cost will also increase. - correct answer ✔✔ True
Explanation: total variable costs change in direct proportion to changes in volume
What is a cost equation? - correct answer ✔✔ a mathematical equation for a straight line to
express how a cost behaves
