Test Bank for Principles of Cost Accounting, 16th Edition

CHAPTER 10: COST ANALYSIS FOR MANAGEMENT DECISION MAKING Student: ___________________________________________________________________________ 1. Which of the following is a more descriptive term of the type of cost accounting often called "direct costing"? A. Prime costing B. Out-of-pocket costing C. Variable costing D. Relevant costing 2. What costs are treated as product costs under direct costing? A. Only direct costs B. Only variable manufacturing costs C. All variable costs D. All variable and fixed manufacturing costs 3. The basic assumption made in a variable costing system with respect to fixed costs is that all fixed costs are: A. Sunk costs. B. Product costs. C. Fixed as to the total cost. D. Period costs. 4. Fortran Industries produces burner elements for stoves. Each element sells for $20, and the company sells approximately 2,000,000 gears each year. Unit cost data for the year follows: Direct material $4.00 Direct labor 3.00 Other costs: Variable Fixed Manufacturing $2.50 $5.00 Distribution 1.50 1.00