1. Indirect manufacturing costs: a can be traced to the product that created the
ID: 2380527 • Letter: 1
Question
1. Indirect manufacturing costs:
a can be traced to the product that created the costs
b may have a cause-and-effect relationship with capacity rather than with individual units of production
c generally include the cost of material and the cost of labor
d are included in period costs
a how costs react to a change in the level of activity
b whether a cost is incurred in a manufacturing, merchandising, or service company
c classifying costs as either product or period costs
d whether a particular expense has been ethically incurred
a direct material cost
b direct labor cost
c indirect manufacturing cost
d general and administrative cost
a sales volume can be better estimated
b costs can be better estimated as volume expands and contracts
c true costs of processes can be better evaluated
d process inefficiencies can be better identified and, as a result, improved
a selling and marketing costs
b direct material and direct labor costs
c the cost of equipment used to manufacture several different products
d All of these are correct.
a. Direct Material Cost
b. Fixed Cost
a a. Yes, b. Yes
b a. Yes, b. No
c a. No, b. Yes
d a. No, b. No
a sunk costs.
b period costs.
c variable costs.
d excluded from product costs.
8. When the level of activity decreases within the relevant range, the fixed cost per unit will:
a decrease.
b increase.
c remain the same.
d The effect cannot be predicted.
a. Total Variable Cost
b. Variable Cost Per Unit
a a. Increases, b. Decreases
b a. Constant, b. Decreases
c a. Decreases, b. Constant
d a. Increases, b. Constant
10. The potential benefit that is given up when one alternative is selected over another is called:
a A sunk cost.
b An opportunity cost.
c Both a sunk cost and an opportunity cost.
d Neither a sunk cost nor an opportunity cost.
a Incremental cost of selecting one alternative over another.
b Opportunity cost of using the asset in an alternative.
c Differential cost between two alternatives.
d The original cost of the asset.
a $96,000
b $62,000
c $68,000
d $74,000
Annual operating cost $80,000
Fixed operating costs other than depreciation $14,000
Resale value, if sold now $25,000
Original cost of current machine $68,000
a $80,000
b $14,000
c $25,000
d $68,000
Which of the following terms could be used to correctly describe the cost of electricity used to run the stamping machine?
a variable cost
b indirect cost
c manufacturing overhead cost
d All of these
The cost of the raw materials that will be used in manufacturing the computer board is:
a a sunk cost
b a fixed cost
c a period cost
d a variable cost
To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)
a $442,545
b $452,500
c $473,326
d $432,590
To the nearest whole cent, what should be the average cost of operating the helpline per call at a volume of 25,300 calls in a month? (Assume that this call volume is within the relevant range.)
a $18.93
b $18.00
c $17.89
d $18.10
Corporate headquarters building lease $77,000
Cosmetics Department sales commissios-Northridge Store $4,000
Corporate legal office salaries $59,000
Store manager's salary-Northridge Store $11,000
Heating-Northridge Store $10,000
Cosmetics Department cost of sales-Northridge Store $37,000
Central warehouse lease cost $16,000
Store security-Northridge Store $12,000
Cosmetics Department manager's salary-Northridge Store $4,000
The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores.
What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?
a $78,000
b $45,000
c $41,000
d $37,000
In this decision, the lost income from the local delivery routes given up can best be described as a(n):
a opportunity cost.
b conversion cost.
c sunk cost.
d differential (incremental) cost
In making the decision to invest in the model 240 machine, the opportunity cost was:
a $545,000
b $450,000
c $532,000
d $527,000
Explanation / Answer
1 b may have a cause-and-effect relationship with capacity rather than with individual units of production
2 c classifying costs as either product or period costs
3 c indirect manufacturing cost
4 b costs can be better estimated as volume expands and contracts
5 c the cost of equipment used to manufacture several different products
6 d a. No, b. No
7 7 c variable costs.
8 8 d The effect cannot be predicted.
9 d a. Increases, b. Constant
10 b An opportunity cost.
11 a Incremental cost of selecting one alternative over another.
12 d $74,000
13 d $68,000
14 c manufacturing overhead cost
15 d a variable cost
16 c $473,326
17 17 c $17.89
18 d $37,000
19 b conversion cost.
20 d $527,000
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