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45. The cost of direct materials cost is classified as a:
Period cost Product cost
A) Yes Yes
B) No No
C) Yes No
D) No Yes
46. Which of the following costs is classified as a prime cost?
Direct materials Indirect materials
A) Yes Yes
B) No No
C) Yes No
D) No Yes
47. Inventoriable costs are also known as:
48. Fresh Wreath Corporation manufactures wreaths according to customer specifications
and ships them to customers using United Parcel Service (UPS). Which two terms below describe
the cost of shipping these wreaths?
49. If the level of activity increases within the relevant range:
50. Within the relevant range:
51. Discretionary fixed costs:
52. When the activity level declines within the relevant range, what should happen with
respect to the following?
Fixed cost per unit Variable cost per unit
A) No change Increase
B) Increase Increase
C) Increase No change
D) No change No change
53. Stott Company requires one full-time dock hand for every 500 packages loaded daily. The
wages for these dock hands would be:
54. When the level of activity decreases, variable costs will:
55. Data for Cost A and Cost B appear below:
Units Produced Cost Per Unit Total Cost
Cost A
1 ? $10
10 ? $100
100 ? $1,000
1,000 ? $10,000
Cost B
1 $5,000 ?
10 $500 ?
100 $50 ?
1,000 $5 ?
Which of the above best describes the behavior of Costs A and B?
56. Which of the following companies would have the highest proportion of variable costs in
its cost structure?
57. An example of a discretionary fixed cost would be:
58. For planning, control, and decision-making purposes:
59. Which of the following costs, if expressed on a per unit basis, would be expected to
decrease as the level of production and sales increases?
60. In describing the cost equation, Y = a + bX, "a" is:
61. Which of the following is an example of a cost that is variable with respect to the number
of units produced?
62. Contribution margin means:
63. The ________________________ is the amount remaining from sales revenue after all
variable expenses have been deducted.
64. A sunk cost is:
65. The cost of factory machinery purchased last year is:
66. Abbott Company's manufacturing overhead is 20% of its total conversion costs. If direct
labor is $38,000 and if direct materials are $23,000, the manufacturing overhead is:
67. During the month of April, direct labor cost totaled $15,000 and direct labor cost was 30%
of prime cost. If total manufacturing costs during April were $79,000, the manufacturing overhead
was:
68. In April direct labor was 70% of conversion cost. If the manufacturing overhead for the
month was $42,000 and the direct materials cost was $28,000, the direct labor cost was:
69. A manufacturing company prepays its insurance coverage for a three-year period. The
premium for the three years is $2,400 and is paid at the beginning of the first year. Seventy
percent of the premium applies to manufacturing operations and thirty percent applies to selling
and administrative activities. What amounts should be considered product and period costs
respectively for the first year of coverage?
Product Period
A) $800 $0
B) $0 $800
C) $560 $240
D) $240 $560
70. The following costs were incurred in April:
Direct materials $18,000
Direct labor $21,000
Manufacturing overhead $33,000
Selling expenses $14,000
Administrative expenses $19,000
Conversion costs during the month totaled:
71. The following costs were incurred in April:
Direct materials $29,000
Direct labor $24,000
Manufacturing overhead $14,000
Selling expenses $18,000
Administrative expenses $18,000
Prime costs during the month totaled:
72. Eddy Corporation has provided the following production and total cost data for two levels
of monthly production volume. The company produces a single product.
Production volume 6,000 units 7,000 units
Direct materials $582,600 $679,700
Direct labor $136,200 $158,900
Manufacturing overhead $691,800 $714,700
The best estimate of the total variable manufacturing cost per unit is:
