WGU D101 Unit 5 Cost and Managerial Accounting 2026 |
Most Tested Questions & Verified Answers | Graded A+
1. Describe the significance of the vertical-axis intercept of the total cost line in
a CVP graph.
It indicates the total variable costs incurred at zero production.
It represents the total fixed costs that must be covered regardless of
the level of production or sales.
It reflects the contribution margin at different sales levels.
It shows the total revenue generated at the breakeven point.
2. Describe the significance of contribution margin in assessing a company's
profitability.
The contribution margin reflects the total sales of a company.
The contribution margin shows the relationship between fixed and
variable costs.
The contribution margin indicates how much revenue is available to
cover fixed costs and generate profit.
The contribution margin is used to calculate the net income of a
company.
3. Describe how mixed costs differ from pure fixed and pure variable costs.
Mixed costs fluctuate randomly without any relation to fixed or
variable costs.
Mixed costs contain both fixed and variable components, unlike
pure fixed costs which remain constant regardless of activity level,
and pure variable costs which change directly with activity level.
Mixed costs are only variable and do not include fixed components.
, Mixed costs are the same as fixed costs.
4. Littleton, Inc., has fixed costs of $75,000 per month, variable costs of $5 per
unit, and a sales price per unit of $30. What is the break-even quantity per
month?
15,000
3,000
2,500
2,143
5. Which of the following statements is true of sales mix?
It is the relative combination of inputs being purchased by a firm.
It is the relative combination of products being produced by a firm.
It is the relative combination of inputs being used by a firm.
It is the relative combination of products being sold by a firm.
6. Describe why property taxes on a factory building are classified as fixed
costs.
Property taxes are classified as fixed costs because they do not
change with the level of production or sales.
Property taxes are direct costs related to the production of goods.
Property taxes are variable costs since they fluctuate with production
levels.
Property taxes are mixed costs as they include both fixed and variable
components.
, 7. Describe the significance of the slope of the total cost line in a CVP graph.
The slope shows the relationship between total revenue and total
costs.
The slope represents the break-even point in sales volume.
The slope of the total cost line represents the variable costs
incurred for each additional unit produced.
The slope indicates the total fixed costs that do not change with
production levels.
8. Describe the significance of the degree of operating leverage in managerial
accounting.
The degree of operating leverage measures the total fixed costs of a
business.
The degree of operating leverage shows the relationship between
variable costs and sales.
The degree of operating leverage assesses the profitability of a
product line.
The degree of operating leverage indicates how sensitive operating
income is to changes in sales volume.
9. What kind of cost is rent in a retail mall when the rental agreement requires
the tenant to pay a base amount plus a percentage of sales?
Mixed cost
Fixed cost
Opportunity cost
Variable cost
Most Tested Questions & Verified Answers | Graded A+
1. Describe the significance of the vertical-axis intercept of the total cost line in
a CVP graph.
It indicates the total variable costs incurred at zero production.
It represents the total fixed costs that must be covered regardless of
the level of production or sales.
It reflects the contribution margin at different sales levels.
It shows the total revenue generated at the breakeven point.
2. Describe the significance of contribution margin in assessing a company's
profitability.
The contribution margin reflects the total sales of a company.
The contribution margin shows the relationship between fixed and
variable costs.
The contribution margin indicates how much revenue is available to
cover fixed costs and generate profit.
The contribution margin is used to calculate the net income of a
company.
3. Describe how mixed costs differ from pure fixed and pure variable costs.
Mixed costs fluctuate randomly without any relation to fixed or
variable costs.
Mixed costs contain both fixed and variable components, unlike
pure fixed costs which remain constant regardless of activity level,
and pure variable costs which change directly with activity level.
Mixed costs are only variable and do not include fixed components.
, Mixed costs are the same as fixed costs.
4. Littleton, Inc., has fixed costs of $75,000 per month, variable costs of $5 per
unit, and a sales price per unit of $30. What is the break-even quantity per
month?
15,000
3,000
2,500
2,143
5. Which of the following statements is true of sales mix?
It is the relative combination of inputs being purchased by a firm.
It is the relative combination of products being produced by a firm.
It is the relative combination of inputs being used by a firm.
It is the relative combination of products being sold by a firm.
6. Describe why property taxes on a factory building are classified as fixed
costs.
Property taxes are classified as fixed costs because they do not
change with the level of production or sales.
Property taxes are direct costs related to the production of goods.
Property taxes are variable costs since they fluctuate with production
levels.
Property taxes are mixed costs as they include both fixed and variable
components.
, 7. Describe the significance of the slope of the total cost line in a CVP graph.
The slope shows the relationship between total revenue and total
costs.
The slope represents the break-even point in sales volume.
The slope of the total cost line represents the variable costs
incurred for each additional unit produced.
The slope indicates the total fixed costs that do not change with
production levels.
8. Describe the significance of the degree of operating leverage in managerial
accounting.
The degree of operating leverage measures the total fixed costs of a
business.
The degree of operating leverage shows the relationship between
variable costs and sales.
The degree of operating leverage assesses the profitability of a
product line.
The degree of operating leverage indicates how sensitive operating
income is to changes in sales volume.
9. What kind of cost is rent in a retail mall when the rental agreement requires
the tenant to pay a base amount plus a percentage of sales?
Mixed cost
Fixed cost
Opportunity cost
Variable cost
