MANAGEMENT ACCOUNTING - Solutions Manual CHAPTER 11 COST ESTIMATION

I. Questions 1. a. Variable cost: A variable cost is one that remains constant on a per unit basis, but which changes in total in direct relationship to changes in volume. b. Fixed cost: A fixed cost is one that remains constant in total amount, but which changes, if expressed on a per unit basis, inversely with changes in volume. c. Mixed cost: A mixed cost is a cost that contains both variable and fixed cost elements. 2. a. Unit fixed costs will decrease as volume increases. b. Unit variable costs will remain constant as volume increases. c. Total fixed costs will remain constant as volume increases. d. Total variable costs will increase as volume increases. 3. a. Cost behavior: Cost behavior can be defined as the way in whic