Multiple Choices

 For each question write only the letter that corresponds to your
Final Answer, any form of erasure will be considered wrong.
 Use only one-fourth (1/4) sheet of paper, and number it
1. 11. 21.

10. 20. 30.

1. Unit Fixed Costs:
a. Are constant per unit regardless of units
produced or sold.
b.Are determined by dividing total fixed costs by
a denominator such as production or sales
volume.
c. Vary indirectly with activity levels when
stated on a per unit basis.
d.Include both fixed and variable costs.
2. Inventoriable costs:
a. Include only prime costs of manufacturing a
product.
b. Include only the conversion costs of
manufacturing a product.
c. Are expenses when products become parts
of finished goods.
d. Are regarded as assets before the product
are sold.
3. The wages of janitorial staff should
be classified as:
a.Factory overhead
b.Period cost
c.Direct labor cost
d.Prime cost
4. The cost of direct labor associated with
the manufacturing of product should be
expensed when the:
a. Labor is performed
b. Employees are paid
c. Product is transferred to finished goods
inventory
d. Product is sold
5. Wages paid to factory machine
operator of a manufacturing plant are:
Prime cost Conversion Cost
a. Yes No
b. Yes Yes
c. No Yes
d. No No
6. Which of the following items is a
cost object?
a. customer order
b. project
c. division of the company
d. a, b and c
7. In a cost system, the distribution of factory
labor costs usually is recorded as an increase
in:
a. General and Administrative Expense
b. Marketing and Selling Expense
c. Work in Process
d. Both a and b
8. The cost that would normally classified as
common cost is:
a. Office Supplies
b. Real Property Tax
c. Depreciation of delivery equipment
d. Doubtful Account Expense
9. Janitorial Department provides cleaning
services to all departments of a large store.
The costs related to this department would
most likely be classified as:
a. Joint Cost
b. Common Cost
c. Product Cost
d. Irrelevant Cost
10. Which of the following statement/s is/are true:
S1: Lumber can be both a finished product and a
material.
S2: Product cost consists of the sum of prime cost
and conversion cost.
a. True, True
b. True, False
c. False, False
d. False, True
11. Which of the following statement/s is/are true:
S1: Total fixed cost decreased with increased in the
number of units produced and increased with
decreased in output.
S2: Period costs are found in both manufacturing
and merchandising firms.
a. True, True
b. True, False
c. False, False
d. False, True
12. Which of the following statement/s is/are true:
S1: A cost that is present under one alternative but
not in whole or part under another alternative is
known as differential cost.
S2: Like product costs, period costs are not
necessarily treated as expenses in the period in
which they are incurred.
a. True, True
b. True, False
c. False, False
d. False, True
13. A cost center in a process cost system is:
a. Department.
b. Job.
c. Specific product.
d. Employee.
14. A characteristic of a process cost accounting
system is:
a. Costs are accumulated by order.
b. Work in process inventory is restated in terms
of equivalent whole units.
c. It is used by company manufacturing custom
machinery.
d. None of these is correct.
15. Characteristics that job order costing and
process costing have in common include all of the
following except:
a. The use of predetermined factory overhead
rates.
b. Each can be used by service firms.
c. The costs of materials and labor are charged
to the departments where they are incurred.
d. The primary objective is to complete a unit
cost for products.
16. Cost accounting differs from financial
accounting in that financial accounting:
a. Is mostly concerned with external financial
reporting.
b. Is mostly concerned with individual
departments of the company.
c. Provides the additional information required
for special reports to management.
d. Puts more emphasis on future operations.
17. Cost classifications are based on the
relationship of costs to all of the following
except:
a. ledger accounts
b. accounting periods
c. products
d. volume of production
18. Unit cost information is important for making
all of the following marketing decisions except:
a. Determining the selling price of a product.
b. Bidding on contracts.
c. Determining the amount of advertising needed
to promote the product.
d. Determining the amount of profit that each
product earns.
19. The method of analyzing cost behavior that
uses two data points to first determine the
variable cost per unit and then the total fixed
cost is the:
a. Method of least squares.
b. Scattergraph method.
c. High-low method.
d. Observation method.
20. Costs that change in relation to volume
changes, but not in direct proportion to those
changes, are known as:
a. Variable costs.
b. Semivariable costs.
c. Fixed costs.
d. Curvilinear costs.
21. The quantitative method that will separate a
semivariable cost into its fixed and variable
components with the highest degree of precision is:
a. least squares method
b.scattergraph method
c. account analysis
d.high low method
22. Within a relevant range, the amount of fixed cost
per unit:
a. differs at each production level on a per unit basis
b. decreases as production increases on a per unit
basis
c. increases as production decreases on a per unit
basis
d. all of the above
23. The term "relevant range" as used in cost
accounting means the range over which:
a. relevant costs are incurred
b.cost relationships are valid
c. costs may fluctuate
d.production may vary
24. One advantage of using method of least square is
that:
a. computations are simplified
b. only two data points need be considered
c. a two dimensional graph may be used to show
cost relationships
d. the effects of several variables on costs may be
analyzed
25. An example of a cost that is irrelevant to a
future decision is a(n):
a. differential cost
b.sunk cost
c. out-of-pocket cost
d.opportunity cost
26. Joint costs are:
a. direct costs
b.costs of facilities or services employed by two or
more operations
c. revenue expenditures
d.always a product cost
27. Common costs are:
a. costs that occur when the production of one
product is possible only if one or more other
products are manufactured at the same time
b.intended to benefit future periods
c. variable in direct proportion to the level of
production
d. costs of facilities or services employed by two
or more operations
28. Factory overhead includes:
a. indirect materials but not indirect labor
b.indirect labor but not indirect materials
c. all manufacturing costs
d.all manufacturing costs, except direct materials
and direct labor
29. A type of employee whose wages are not a
component of indirect labor is a(n):
a. inspector
b.supervisor
c. assembler
d.maintenance worker
30. An expense that is likely to contain both fixed
and variable components is:
a. security guard wages
b.supplies
c. heat, light, and power
d.small tools