APSC 221 Midterm 1 Exam Questions with Correct Answers Latest Update 2025/2026
Fixed costs - Answers Unaffected by changes in activity level over a feasible range of
operations for the capacity or capability available
Variable costs - Answers Associated with an operation that varies with the quantity of output or
the measures of activity level
Incremental costs - Answers The additional cost that results from increasing the output of a
system
E.g. equipment cost for another production line
Direct costs - Answers Can be reasonably measured and allocated to a specific output or work
activity
Indirect costs - Answers Difficult to attribute or allocate to a specific output or work activity (aka
overhead or burden)
E.g. general office supplies and equipment, electricity, property taxes, supervision
Cash cost - Answers payment of cash an an associated cash flow
Book cost - Answers Does not involve a cash transaction and is reflected in the accounting
system.
Sunk cost - Answers Has occurred in the past and has no relevance to estimates of future costs
and revenues related to an alternative course of action
Opportunity cost - Answers Incurred because of the used of limited resources such that the
opportunity to use those resources for monetary advantage in an alternative use is foregone
Life cycle cost - Answers summation of all the costs related to a product, structure or service
during its lifesplan
price-demand relationship - Answers is linear
revenue vs. demand - Answers is parabolic
cost and revenue categories - Answers - Capital investment (fixed and working)
- Labour costs
- Material costs
- Maintenance costs
- Property taxes and insurance
, - Overhead costs
- Disposal costs
- Revenues
- Quality (and scrap) costs
- Market (or salvage) values
order of magnitudes estimate - Answers used in the planning and initial evaluation stage of a
project
semi-detailed/budget estimates - Answers used in the preliminary or conceptual design stage of
a project
definitive or detailed estimates - Answers used in the detailed design stage and during the
implementation stage for controlling the project
indexes - Answers dimensionless numbers that can be used to estimate future or past costs
and prices relative to an arbitrarily defined reference year
consumer price index - Answers measure of inflation
unit techniques - Answers used to estimate cost when you have reliable average unit costs or
revenues (uses broad categories)
parametric cost estimating - Answers based on historical cost data and using statistical
methods to develop a model; model focuses on key independent variables or cost drivers and is
used to estimate budget level costs
power-sizing technique - Answers takes into consideration economies of larger scale
set-up costs - Answers are a fixed (upfront) cost since they are needed regardless of how many
additional units are made
learning curve model - Answers based on the assumption that there is a constant percentage
reduction in input resources
interest rates - Answers used to make comparisons between costs and benefits that occur at
different times
I - Answers interest; compensation for giving up the use of money for the duration of a loan
i - Answers interest rate
N - Answers total number of interest periods
Fixed costs - Answers Unaffected by changes in activity level over a feasible range of
operations for the capacity or capability available
Variable costs - Answers Associated with an operation that varies with the quantity of output or
the measures of activity level
Incremental costs - Answers The additional cost that results from increasing the output of a
system
E.g. equipment cost for another production line
Direct costs - Answers Can be reasonably measured and allocated to a specific output or work
activity
Indirect costs - Answers Difficult to attribute or allocate to a specific output or work activity (aka
overhead or burden)
E.g. general office supplies and equipment, electricity, property taxes, supervision
Cash cost - Answers payment of cash an an associated cash flow
Book cost - Answers Does not involve a cash transaction and is reflected in the accounting
system.
Sunk cost - Answers Has occurred in the past and has no relevance to estimates of future costs
and revenues related to an alternative course of action
Opportunity cost - Answers Incurred because of the used of limited resources such that the
opportunity to use those resources for monetary advantage in an alternative use is foregone
Life cycle cost - Answers summation of all the costs related to a product, structure or service
during its lifesplan
price-demand relationship - Answers is linear
revenue vs. demand - Answers is parabolic
cost and revenue categories - Answers - Capital investment (fixed and working)
- Labour costs
- Material costs
- Maintenance costs
- Property taxes and insurance
, - Overhead costs
- Disposal costs
- Revenues
- Quality (and scrap) costs
- Market (or salvage) values
order of magnitudes estimate - Answers used in the planning and initial evaluation stage of a
project
semi-detailed/budget estimates - Answers used in the preliminary or conceptual design stage of
a project
definitive or detailed estimates - Answers used in the detailed design stage and during the
implementation stage for controlling the project
indexes - Answers dimensionless numbers that can be used to estimate future or past costs
and prices relative to an arbitrarily defined reference year
consumer price index - Answers measure of inflation
unit techniques - Answers used to estimate cost when you have reliable average unit costs or
revenues (uses broad categories)
parametric cost estimating - Answers based on historical cost data and using statistical
methods to develop a model; model focuses on key independent variables or cost drivers and is
used to estimate budget level costs
power-sizing technique - Answers takes into consideration economies of larger scale
set-up costs - Answers are a fixed (upfront) cost since they are needed regardless of how many
additional units are made
learning curve model - Answers based on the assumption that there is a constant percentage
reduction in input resources
interest rates - Answers used to make comparisons between costs and benefits that occur at
different times
I - Answers interest; compensation for giving up the use of money for the duration of a loan
i - Answers interest rate
N - Answers total number of interest periods
