Question 1

Which of the following is a period cost?

Accepted Answer

A)  the production supervisor's salary 
B)  direct labour 
C)  property taxes on the office building 
D)  property taxes on the production facilities 
A)  the production supervisor's salary 
B)  direct labour 
C)  property taxes on the office building 
D)  property taxes on the production facilities

Question 2

An equipment lease that specifies a payment of £5,000 per month plus £8 per machine hour used is an example of a

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  step cost. 
D)  mixed cost. 
A)  fixed cost. 
B)  variable cost. 
C)  step cost. 
D)  mixed cost.

Question 3

In a traditional manufacturing company, product costs include

Accepted Answer

A)  direct materials only. 
B)  direct materials, direct labour, and factory overhead. 
C)  direct materials and direct labour only. 
D)  direct labour only. 
A)  direct materials only. 
B)  direct materials, direct labour, and factory overhead. 
C)  direct materials and direct labour only. 
D)  direct labour only.

Question 4

Which of the following is a product cost?

Accepted Answer

A)  advertising expenditures 
B)  insurance on the office buildings 
C)  depreciation of the salesmen's cars 
D)  depreciation of the production facilities 
A)  advertising expenditures 
B)  insurance on the office buildings 
C)  depreciation of the salesmen's cars 
D)  depreciation of the production facilities

Question 5

An equipment lease that specifies payment of £1,000 per month plus £5 per machine hour used is an example of a

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  mixed cost. 
D)  step cost. 
A)  fixed cost. 
B)  variable cost. 
C)  mixed cost. 
D)  step cost.

Question 6

Which of the following cost behaviour patterns are unrelated to unit activity?

Accepted Answer

A)  fixed costs 
B)  variable costs 
C)  step costs 
D)  mixed costs 
A)  fixed costs 
B)  variable costs 
C)  step costs 
D)  mixed costs

Question 7

____ are expensed in the period in which they are incurred.

Accepted Answer

A)  Direct materials 
B)  Product costs 
C)  Noninventoriable costs 
D)  Inventoriable costs 
A)  Direct materials 
B)  Product costs 
C)  Noninventoriable costs 
D)  Inventoriable costs

Question 8

The direct costs of operating a university computer centre would NOT include

Accepted Answer

A)  rent paid for computers. 
B)  a fair share of university utilities. 
C)  paper used by the centre. 
D)  computer consultants' salaries. 
A)  rent paid for computers. 
B)  a fair share of university utilities. 
C)  paper used by the centre. 
D)  computer consultants' salaries.

Question 9

If production volume increases from 8,000 to 10,000 units,

Accepted Answer

A)  total costs will increase by 20 per cent. 
B)  total costs will increase by 25 per cent. 
C)  total variable costs will increase by 25 per cent. 
D)  mixed and variable costs will increase by 25 per cent. 
A)  total costs will increase by 20 per cent. 
B)  total costs will increase by 25 per cent. 
C)  total variable costs will increase by 25 per cent. 
D)  mixed and variable costs will increase by 25 per cent.

Question 10

____ are expensed in the period in which they are incurred.

Accepted Answer

A)  Direct materials 
B)  Product costs 
C)  Factory overhead 
D)  Nonproduction costs 
A)  Direct materials 
B)  Product costs 
C)  Factory overhead 
D)  Nonproduction costs

Question 11

Salaries paid to shift supervisors is an example of a

Accepted Answer

A)  step-variable cost. 
B)  step-fixed cost. 
C)  variable cost. 
D)  mixed cost. 
A)  step-variable cost. 
B)  step-fixed cost. 
C)  variable cost. 
D)  mixed cost.

Question 12

Holly Ltd. has the following costs for 1,000 units:   What is the total amount of direct materials for 100 units?

Accepted Answer

A)  £1.50 
B)  £3.00 
C)  £150.00 
D)  £225.00 
A)  £1.50 
B)  £3.00 
C)  £150.00 
D)  £225.00

Question 13

Direct costs

Accepted Answer

A)  are incurred for the benefit of the business as a whole. 
B)  would continue even if a particular product were discontinued. 
C)  can be assigned to product only by a process of allocation. 
D)  are those costs that can be easily and accurately traced to a cost objective. 
A)  are incurred for the benefit of the business as a whole. 
B)  would continue even if a particular product were discontinued. 
C)  can be assigned to product only by a process of allocation. 
D)  are those costs that can be easily and accurately traced to a cost objective.

Question 14

Mixed costs

Accepted Answer

A)  are step costs. 
B)  in total, remain constant within a relevant range. 
C)  have a fixed and variable component. 
D)  on a per unit basis, are constant as activity increases or decreases. 
A)  are step costs. 
B)  in total, remain constant within a relevant range. 
C)  have a fixed and variable component. 
D)  on a per unit basis, are constant as activity increases or decreases.

Question 15

Which of the following statements is TRUE about fixed and variable costs?

Accepted Answer

A)  Both costs are constant when considered on a per-unit basis. 
B)  Both costs are constant when considered on a total basis. 
C)  Fixed costs are constant in total and variable costs are constant per unit. 
D)  Variable costs are constant in total and fixed costs are constant per unit. 
A)  Both costs are constant when considered on a per-unit basis. 
B)  Both costs are constant when considered on a total basis. 
C)  Fixed costs are constant in total and variable costs are constant per unit. 
D)  Variable costs are constant in total and fixed costs are constant per unit.

Question 16

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

Accepted Answer

A)  fixed. 
B)  variable. 
C)  mixed. 
D)  step. 
A)  fixed. 
B)  variable. 
C)  mixed. 
D)  step.

Question 17

An example of a period cost is

Accepted Answer

A)  insurance on factory equipment. 
B)  chief executive's salary. 
C)  property taxes on factory building. 
D)  wages of factory custodians. 
A)  insurance on factory equipment. 
B)  chief executive's salary. 
C)  property taxes on factory building. 
D)  wages of factory custodians.

Question 18

Mixed costs contain both

Accepted Answer

A)  product and period costs. 
B)  fixed and variable costs. 
C)  direct and indirect costs. 
D)  controllable and noncontrollable costs. 
A)  product and period costs. 
B)  fixed and variable costs. 
C)  direct and indirect costs. 
D)  controllable and noncontrollable costs.

Question 19

Which of the following costs is a variable cost?

Accepted Answer

A)  supervisors' salaries 
B)  research and development 
C)  materials used in production 
D)  rent 
A)  supervisors' salaries 
B)  research and development 
C)  materials used in production 
D)  rent

Question 20

Which of the following costs would be included as part of factory overhead?

Accepted Answer

A)  depreciation of plant equipment 
B)  paint used for product finish 
C)  depreciation on the corporation's office building 
D)  paper used in the production of books 
A)  depreciation of plant equipment 
B)  paint used for product finish 
C)  depreciation on the corporation's office building 
D)  paper used in the production of books

Exam 2: An Introduction to Cost Terms and Concepts

Which of the following is a period cost?

An equipment lease that specifies a payment of £5,000 per month plus £8 per machine hour used is an example of a

In a traditional manufacturing company, product costs include

Which of the following is a product cost?

An equipment lease that specifies payment of £1,000 per month plus £5 per machine hour used is an example of a

Which of the following cost behaviour patterns are unrelated to unit activity?

____ are expensed in the period in which they are incurred.

The direct costs of operating a university computer centre would NOT include

If production volume increases from 8,000 to 10,000 units,

____ are expensed in the period in which they are incurred.

Salaries paid to shift supervisors is an example of a

Holly Ltd. has the following costs for 1,000 units: What is the total amount of direct materials for 100 units?

Direct costs

Mixed costs

Which of the following statements is TRUE about fixed and variable costs?

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

An example of a period cost is

Mixed costs contain both

Which of the following costs is a variable cost?

Which of the following costs would be included as part of factory overhead?

Introduction to Management Accounting

Cost Assignment

Accounting Entries for a Job Costing System

Process Costing

Joint and By-Product Costing

Income Effects of Alternative Cost Accumulation Systems

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Activity-Based Costing

Pricing Decisions and Profitability Analysis

Decision-Making Under Conditions of Risk and Uncertainty

Capital Investment Decisions: Appraisal Methods

Capital Investment Decisions: the Impact of Capital Rationing, Taxation, Inflation and Risk

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis 1

Standard Costing and Variance Analysis 2: Further Aspects

Divisional Financial Performance Measures

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Management Accounting

Cost Estimation and Cost Behaviour

Quantitative Models for the Planning and Control of Stocks

The Application of Linear Programming to Management Accounting

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