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Exam IIA-CIA-Part3 topic 1 question 114 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 114
Topic #: 1
[All IIA-CIA-Part3 Questions]

An organization accumulated the following data for the prior fiscal year:

Value of -

Percentage of -

Quarter -

Output Produced -

Cost X -
$4,750,000
2.9
$4,700,000
3.0
$4,350,000
3.2
$4,000,000
3.5
Based on this data, which of the following describes the value of Cost X in relation to the value of Output Produced?

  • A. Cost X is a variable cost.
  • B. Cost X is a fixed cost.
  • C. Cost X is a semi-fixed cost.
  • D. Cost X and the value of Output Produced are unrelated.
Show Suggested Answer Hide Answer
Suggested Answer: B 🗳️
by Wakie at Sept. 10, 2019, 8:08 p.m.

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Wakie
Highly Voted 5 years, 5 months ago
i don't understand what this question is asking based on the data?
upvoted 11 times
...
Shars
Highly Voted 4 years, 4 months ago
I also do not understand the question. Can someone please explain...
upvoted 6 times
...
emtofid
Most Recent 1 month, 3 weeks ago
Selected Answer: B
The value of Output Produced decreases from $4,750,000 in the first quarter to $4,000,000 in the fourth quarter. The Percentage of Cost X relative to the Output Produced increases from 2.9% to 3.5% as the Output Produced decreases. This pattern suggests that Cost X does not vary proportionally with the Output Produced. Instead: If Cost X were a variable cost, the percentage would remain constant because it would change directly with the Output Produced. If Cost X were a fixed cost, the percentage would increase as the Output Produced decreases, which matches the observed pattern. Correct Answer: B. Cost X is a fixed cost. Explanation: Fixed costs remain constant in total, regardless of the level of output. As output decreases, fixed costs represent a larger percentage of the total output value, which aligns with the increasing percentages shown in the data.
upvoted 3 times
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34205ac
3 months, 3 weeks ago
The question is not consistent with the answers
upvoted 1 times
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Steve8Taiwan
3 years, 3 months ago
Can not understand this question.
upvoted 1 times
...
Barmechan
3 years, 4 months ago
I also agree with all of you
upvoted 1 times
...
Talz
3 years, 10 months ago
Agreed, I also don't understand what is being asked here, or the context.
upvoted 1 times
...
Roopz
4 years, 8 months ago
I agree with Wakie
upvoted 5 times
...
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C (25%)
B (20%)
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