Understanding Cost Behavior

What is the primary focus when analyzing cost behavior in a manufacturing business?

• Changes in the number of employees

• Changes in the quantity of items produced

• Changes in the marketing strategy

• Changes in the company's location

Which of the following is an example of a fixed cost?

• Wages for hourly workers

• Raw materials

• Mobile phone contract with unlimited usage

• Electricity bill

How do variable costs behave in relation to production levels?

• They increase as production increases

• They fluctuate randomly

• They decrease as production increases

• They remain constant

What characterizes a semi-variable cost?

• It has both fixed and variable components

• It is entirely variable

• It is entirely fixed

• It changes unpredictably

In the context of electricity costs, what is the fixed component?

• The price per unit of electricity

• The standing charge

• The total monthly bill

• The cost of electrical appliances

If a company produces 200 units with a variable cost of £20 per unit and fixed costs of £2,000, what is the total production cost?

• £4,000

• £6,000

• £8,000

• £10,000

What is the unit cost if the total production cost is £6,000 for 200 units?

• £25

• £30

• £20

• £35

For 400 units produced with a variable cost of £20 per unit and fixed costs of £2,000, what is the total production cost?

• £12,000

• £8,000

• £6,000

• £10,000

How does the unit cost change when production increases from 200 to 400 units?

• It fluctuates

• It decreases

• It remains the same

• It increases

What happens to the total variable cost as more units are produced?

• It remains constant

• It increases

• It becomes unpredictable

• It decreases