2-5 Test Bank for Davis & Davis, Managerial Accounting, 4/e

Answers to True-False Statements

Item Ans Item Ans Item Ans Item Ans
1. T 9. T 17. T 25. F
2. F 10. F 18. T 26. T
3. T 11. T 19. T 27. T
4. F 12. F 20. F 28. F
5. F 13. T 21. F 29. T
6. T 14. F 22. T 30. T
7. T 15. T 23. F 31. F
8. F 16. F 24. T 32. T

MULTIPLE-CHOICE QUESTIONS

33. GAAP-based income statements categorize expenses based on

A. business function.
B. cost behavior.
C. dollar amount.
D. contribution margin.
Ans: A, LO: 3, Bloom: K, Unit: 2-3, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting

34. GAAP-based income statements categorize expenses based on

a. product, contribution, selling, or administrative.
b. product, selling, or administrative.
c. contribution, product, administrative.
d. variable costs and fixed costs.
Ans: B, LO: 3, Bloom: K, Unit: 2-3, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

35. If the activity level increases, what happens to the total variable cost?
a. It remains the same.
b. It decreases.
c. It increases.
d. It depends on how much the activity level increases.
Ans: C, LO: 1, Bloom: K, Unit: 2-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting

36. If the activity level decreases, what happens to the total variable cost?
a. It decreases.
b. It increases.
c. It remains the same.
d. It depends on how much the activity level increases.
Ans: A, LO: 1, Bloom: K, Unit: 2-1, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA FN: Reporting, AICPA PC: None, IMA:
Reporting