Question 1

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

Accepted Answer

A)   cost of disposable surgical scissors, which are purchased in increments of 100
B)   cost of soaking solution to clean jewelry (Each jar can soak 50 rings before losing effectiveness.) 
C)   cost of tuition at £300 per credit hour up to 15 credit hours (Hours taken in excess of 15 hours are free.) 
D)   cost of disposable gowns used by patients in a hospitalE) All of the above
F) B) and C)

Question 2

All of Jill Enterprise's operations are housed in one building with the costs of occupying the building accumulated in a separate account. The total costs incurred in May amounted to £24,000. The company allocates these costs on the basis of square feet of floor space occupied. Administrative offices, sales offices, and factory operations occupy 9,000, 6,000, and 30,000 square feet, respectively. How much will be classified as a product cost for May?

Accepted Answer

A)   £4,800
B)   £3,200
C)   £16,000
D)   £24,000E) A) and C)
F) B) and D)

Question 3

Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product?

Accepted Answer

A)   the wages paid to assembly-line production workers
B)   the tires for buses
C)   the windshields for buses
D)   the depreciation on factory buildingE) All of the above
F) None of the above

Question 4

Which of the following costs incurred by a furniture manufacturer would be a product cost?

Accepted Answer

A)   lumber
B)   office salaries
C)   commissions paid to sales staff
D)   controller's salaryE) All of the above
F) B) and D)

Question 5

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis?

Accepted Answer

A)   total direct material costs
B)   a consultant paid £75 per hour with a maximum fee of £1,200
C)   employees who are paid £10 per hour and guaranteed a minimum weekly wage of £200
D)   rent on exhibit space at a conventionE) A) and C)
F) B) and C)

Question 6

All of the following are product costs EXCEPT

Accepted Answer

A)   direct materials.
B)   direct labour.
C)   manufacturing overhead.
D)   selling and administrative costs.
E)   none of the above.F) None of the above
G) A) and B)

Question 7

Which item is not an example of a sunk cost?

Accepted Answer

A)   materials needed for production
B)   purchase cost of machinery
C)   depreciation
D)   All are sunk costs.E) A) and C)
F) A) and D)

Question 8

As the volume of activity increases within the relevant range, the variable cost per unit

Accepted Answer

A)   decreases.
B)   decreases at first, then increases.
C)   remains the same.
D)   increases.E) All of the above
F) A) and B)

Question 9

Which of the following costs is an indirect product cost?

Accepted Answer

A)   property taxes on plant facilities
B)   wages of assembly workers
C)   materials used
D)   president's salaryE) C) and D)
F) A) and D)

Question 10

The Penang Company has the following information available regarding costs at various levels of monthly production:  Required: 
a.
Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings:
Variable Costs
Fixed Costs
Mixed Costs
b.
Develop an equation for total monthly production costs.
c.
Predict total costs for a monthly production volume of 8,000 units.

Accepted Answer

b.
Variable costs = (£300,600 - £219,60...

Question 11

Selling and administrative costs are classified as

Accepted Answer

A)   product costs.
B)   conversion costs.
C)   period costs.
D)   factory overhead.E) B) and D)
F) C) and D)

Question 12

Product costs are converted from cost to expense when

Accepted Answer

A)   units are completed.
B)   materials are purchased.
C)   units are sold.
D)   materials are requisitioned.E) A) and B)
F) A) and C)

Question 13

Which of the following items would NOT be classified as part of factory overhead of a firm that makes sailboats?

Accepted Answer

A)   factory supplies used
B)   canvas used in sail
C)   depreciation of factory buildings
D)   indirect materialsE) C) and D)
F) A) and D)

Question 14

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

Accepted Answer

A)   insurance on the production equipment
B)   direct materials
C)   the production supervisor's salary
D)   depreciation of the factory buildingE) B) and C)
F) C) and D)

Question 15

Direct costs

Accepted Answer

A)   can be assigned to cost objects in an economically feasible way.
B)   are typically assigned to cost objects using a cause-and-effect relationship.
C)   result in more accurate cost assignments.
D)   do all of the above.E) A) and B)
F) C) and D)

Question 16

Which one of the following sentences about step costs is true?

Accepted Answer

A)   Step costs increase with each additional unit produced.
B)   Step costs have no relation to number of units produced.
C)   Step costs are constant within certain ranges of activity but differ outside those ranges of activity.
D)   Step costs are variable within narrowly defined ranges of activity, but constant over wider ranges of activity.E) A) and D)
F) None of the above

Question 17

A supervisor's salary of £2,000 per month is an example of a

Accepted Answer

A)   fixed cost.
B)   variable cost.
C)   step cost.
D)   mixed cost.E) B) and D)
F) A) and B)

Question 18

Which of the following costs would be classified as variable costs with respect to volume?

Accepted Answer

A)   property taxes on the manufacturing facility
B)   the wheels on an automobile
C)   the cost of installing production equipment
D)   all of the aboveE) A) and D)
F) A) and B)

Question 19

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Accepted Answer

A)   fixed cost
B)   mixed cost
C)   variable cost
D)   step costE) C) and D)
F) None of the above

Question 20

The wages of a production equipment operator would be classified as

Accepted Answer

A)   direct materials.
B)   direct labour.
C)   manufacturing overhead.
D)   selling and administrative costs.E) A) and B)
F) A) and C)

Exam 2: An Introduction to Cost Terms and Concepts

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

Correct Answer
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Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis?

Correct Answer
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Correct Answer
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Product costs are converted from cost to expense when

Correct Answer
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Which of the following costs would be classified as variable costs with respect to volume?

Correct Answer
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Which item is not an example of a sunk cost?

Correct Answer
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All of the following are product costs EXCEPT

Correct Answer
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Which of the following items would NOT be classified as part of factory overhead of a firm that makes sailboats?

Correct Answer
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Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Correct Answer
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The wages of a production equipment operator would be classified as

Correct Answer
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As the volume of activity increases within the relevant range, the variable cost per unit

Correct Answer
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Which of the following is an example of a variable cost?

Correct Answer
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Which of the following costs incurred by a furniture manufacturer would be a product cost?

Correct Answer
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Which of the following costs is an indirect product cost?

Correct Answer
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Correct Answer
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b.
Variable costs = (£300,600 - £219,60...
View Answer

Selling and administrative costs are classified as

Correct Answer
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Direct costs

Correct Answer
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Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product?

Correct Answer
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A supervisor's salary of £2,000 per month is an example of a

Correct Answer
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Which one of the following sentences about step costs is true?

Correct Answer
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Exam 2: An Introduction to Cost Terms and Concepts

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

Correct AnswerverifiedShow Answer

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Product costs are converted from cost to expense when

Correct AnswerverifiedShow Answer

Which of the following costs would be classified as variable costs with respect to volume?

Correct AnswerverifiedShow Answer

Which item is not an example of a sunk cost?

Correct AnswerverifiedShow Answer

All of the following are product costs EXCEPT

Correct AnswerverifiedShow Answer

Which of the following items would NOT be classified as part of factory overhead of a firm that makes sailboats?

Correct AnswerverifiedShow Answer

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Correct AnswerverifiedShow Answer

The wages of a production equipment operator would be classified as

Correct AnswerverifiedShow Answer

As the volume of activity increases within the relevant range, the variable cost per unit

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following costs incurred by a furniture manufacturer would be a product cost?

Correct AnswerverifiedShow Answer

Which of the following costs is an indirect product cost?

Correct AnswerverifiedShow Answer

Correct Answerverified b.Variable costs = (£300,600 - £219,60...View AnswerShow Answer

Selling and administrative costs are classified as

Correct AnswerverifiedShow Answer

Direct costs

Correct AnswerverifiedShow Answer

Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product?

Correct AnswerverifiedShow Answer

A supervisor's salary of £2,000 per month is an example of a

Correct AnswerverifiedShow Answer

Which one of the following sentences about step costs is true?

Correct AnswerverifiedShow Answer

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b.
Variable costs = (£300,600 - £219,60...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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