Chapter 2 quiz
1. Budgeted costs are:
a. the costs incurred this year
b. the costs incurred last year
*c. planned or forecasted costs
d. competitor’s costs
2. Cost assignment is:
a. always arbitrary
*b. includes tracing and allocating
c. the same as cost accumulation
d. finding the difference between budgeted and actual costs
3. Which of the following statements about the direct/indirect cost classification is
NOT true?
a. Direct costs are always traced.
*b. Direct costs are always allocated.
c. The design of operations affects the direct/indirect classification.
d. The direct/indirect classification depends on the choice of cost object.
4. A manufacturing plant produces two product lines: football equipment and hockey
equipment. Direct costs for the football equipment line are the:
a. beverages provided daily in the plant break room
*b. monthly lease payments for a specialized piece of equipment needed to
manufacture the football helmet
c. salaries of the clerical staff that work in the company administrative offices
d. utilities paid for the manufacturing plant
5. An understanding of the underlying behavior of costs helps in all of the following
EXCEPT:
a. costs can be better estimated as volume expands and contracts
b. true costs can be better evaluated
c. process inefficiencies can be better identified and as a result improved
*d. sales volume can be better estimated
6. The MOST likely cost driver of distribution costs is the:
a. number of parts within the product
*b. number of miles driven
c. number of products manufactured
d. number of production hours
7. A band of normal activity or volume in which specific cost-volume relationships
are maintained is referred to as the:
a. average range
b. cost-allocation range
c. cost driver range
*d. relevant range
8. Within the relevant range, if there is a change in the level of the cost driver, then
a. total fixed costs and total variable costs will change
b. total fixed costs and total variable costs will remain the same
*c. total fixed costs will remain the same and total variable costs will change
d. total fixed costs will change and total variable costs will remain the same
9. When 10,000 units are produced, fixed costs are $14 per unit. Therefore, when
20,000 units are produced fixed costs will:
a. increase to $28 per unit
b. remain at $14 per unit
*c. decrease to $7 per unit
d. total $280,000
Total fixed costs = $14 x 10,000 units = $140,000
