INDIVIDUAL ACTIVITY

Activity No. 1: TRUE-FALSE QUESTIONS

Instruction: Indicate whether the following statements are true or false by inserting in the blank
space provided a capital “T” for true or “F” for false.

___ 1. The materials, labor, and overhead costs incurred to produce a product are called period
costs.
___ 2. Marketing, Selling, and Administrative Costs are the three broad classifications of costs
incurred by a manufacturing company.
___ 3. Lumber can be both a finished product and a material.
___ 4. Product cost consists of the sum of prime cost and conversion cost.
___ 5. Total fixed costs decrease with increase in the number of units produced and increase
with decrease in output.
___ 6. Period costs are found in both merchandising and manufacturing firms.
___ 7. The three cost elements of manufactured goods are direct materials, direct labor, and
marketing costs.
___ 8. A cost that is present under one alternative but absent in whole or part under another
alternative is known as a differential cost.
___ 9. Like product costs, period costs are not necessarily treated as expenses in the period in
which they are incurred.
___ 10. Variable costs are costs that change, in total, in direct proportion to changes in the level
of activity.