A fixed cost remains constant in total and on a per unit basis at various levels of activity.

If volume increases, all costs will increase

Changes in the level of activity will cause unit variable and unit fixed costs to change in opposite directions

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity

The high-low method is used in classifying a mixed cost into its variable and fixed elements

A mixed cost has both selling and administrative cost elements

The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost

When applying the high-low method, the variable cost element of a mixed cost is calculated before the fixed cost element.

An assumption of CVP analysis is that all costs can be classified as either variable or fixed

An assumption of CVP analysis is that all costs can be classified as either variable or fixed

Both variable and fixed costs are included in calculating the contribution margin

Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred

The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity (basis of activity).

Actual manufacturing overhead costs should be charged to the Work in Process Inventory account as they are incurred

When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited

Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs

At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold

Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period

When raw materials are purchased, the Work in Process Inventory account is debited