Chap 4

What is meant by the classification of costs by behaviour?

• Classification of costs as material, labour and other expenses

• Classification according to how costs change with activity

• Classification of costs whether costs are direct or indirect

• Classification of costs as prime costs and overheads

The basic principle of cost behaviour is that as the level of activity rises, cost will usually _________. Which is/are the missing word/words?

• Rise

• Fall

• Stay consistent

• Fall then rise again

Which of the following cost would be most likely to be illustrated by the diagram given below?

• Material cost per unit

• Total wages cost

• Factory rent

• Telephone expenses

The following graph represents which type of cost?

• Variable cost

• Semi-variable cost

• Fixed cost

• Stepped-fixed cost

Sales representatives in a company are each paid a salary of $2,000 per month. They also earn commission of 1% of the value of their sales. What cost behavioural classification describes the sales representatives' earnings?

• Variable

• Fixed

• Stepped-fixed

• Semi-variable