SET E

1.) To decide whether cost is variable cost or fixed cost with respect to some
specific activity depends upon

A. units of labor
B. unit of production
C. time horizon
D. units of inventory

2.) In a given scenario, if cost is considered as indirect cost then independent

variable will be considered as

A. demand allocation base

B. supply allocation base
C. cost allocation base
D. price allocation base

3.) If residual error is 51 and predicted cost value is 37, then observed cost value
will be

A. 14
B. 88
C. 24
D. 68

4.) In estimation of cost function, an example of independent variable is

A. level of activity
B. quantity stored
C. quantity manufactured
D. quality of product

5.) If variable cost per unit is $20 and quantity of units sold is 6500, then total
variable cost would be

A. $130,00
B. $150,000
C. $200,000
D. $155,800

6 - 20.) The following are costs that were incurred by Nike, Inc. Determine which
costs are fixed (F) and which are variable (V).

F 50. office supplies, usually approximately $3,000 per month

V 51. rubber for the sole of the shoe, $6 per shoe
F 52. rent on the manufacturing facility building, $188,000 annually
F 53. sales manager salary, $127,000 annually
V 54. worker who operates the machine that puts the shoe together, $2 per shoe
V 55. shoe laces, $1.80 per shoe
V 56. worker who puts the shoes in the shoe box, $0.20 per shoe
F 57. insurance on the manufacturing facility, $23,000 annually
F 58. water and utilities, $22,000 per month consistently
F 59. depreciation on manufacturing equipment, $18,000 each month
F 60. already contracted advertising on television, $1,800,000 annually
V 61. sales commission paid to salespeople based on 5% of sales
F 62. office supplies, usually approximately $3,000 per month
F 63. paper for the copier in the executive offices, usually about $1,200 per month
V 64. glue used in the shoe, approximately $0.18 per shoe