Unit 4 Test

Which of the following is NOT a characteristic of variable expenses?

• They fluctuate with sales volume

• They are constant regardless of sales

• They are important for profit calculations

• They vary with the level of production

What does labor refer to in variable expenses?

• Labor refers to the cost of machinery.

• Labor refers to the amount of money paid for someone's time.

• Labor refers to the cost of materials.

• Labor refers to the cost of utilities.

Which of the following is an example of 'Other' variable expenses?

• Buying raw materials

• Paying for electricity

• Paying UPS to package or ship a product

• Purchasing new machinery

Which of the following is NOT related to making the product or delivering the service?

• Materials

• Labor

• Advertising

• Cost of Goods Sold

What is another term for Cost of Goods Sold?

• Cost of Services Sold

• Cost of Sales

• Cost of Operations

• Cost of Inventory

Which of the following is a variable expense?

• Rent

• Materials

• Insurance

• Salaries

What type of labor is typically for part-time employees working less than 40 hours a week?

• Salary

• Commission

• Hourly

• Fixed

Which type of labor is paid based on the number of products sold?

• Salary

• Commission

• Hourly

• Fixed

What advantage does a business have as it grows in terms of purchasing?

• It can buy from more suppliers

• It can negotiate better prices

• It can sell more products

• It can hire more employees

What is the term for the cost reduction made possible by spreading costs over a larger volume?

• Economy of scale

• Supply and demand

• Market equilibrium

• Price elasticity