Acct ch. 1 100% SOLUTION

Acct ch. 1 100% SOLUTION The term "relevant range" as used in cost accounting means the range over which A. relevant costs are incurred. B. costs may fluctuate. C. cost relationships are valid. D. production may vary. - ANSWER C When cost relationships are linear, total variable prime costs will vary in proportion to changes in A. total overhead cost. B. production volume. C. total material cost. D. direct labor hours. - ANSWER B An example of a fixed cost is A. cost of electricity. B. straight-line depreciation. C. total indirect material cost. D. total hourly wages. - ANSWER B A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n) A. expired cost. B. mixed cost. C. variable cost. D. fixed cost. - ANSWER D Product costs are deducted from revenue A. to minimize taxable income. B. as goods are sold. C. as expenditures are made. D. when production is completed. - ANSWER B When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n) A. decrease in the fixed element. B. decrease in the variable element. C. increase in the mixed element. D. increase in the fixed element. - ANSWER A Which of the following is not a product cost component? A. commission on the sale of a product B. rent on a factory building C. janitorial supplies used in a factory D. indirect production labor wages - ANSWER A Period costs A. are expensed in the same period in which they are incurred. B. are associated with the periodic inventory method. C. are always variable costs. D. remain unchanged over a given period of time. - ANSWER A The indirect costs of converting raw material into finished goods are called A. conversion costs. B. period costs. C. prime costs. D. overhead costs. - ANSWER D . Conversion cost does not include A. factory depreciation. B. direct material. C. supervisors' salaries. D. direct labor. - ANSWER B The distinction between direct and indirect costs depends on whether a cost A. is controllable or non-controllable. B. is variable or fixed. C. can be conveniently and physically traced to a cost object under consideration. D. will increase with changes in levels of activity. - ANSWER C . All costs related to the manufacturing function in a company are A. prime costs. B. conversion costs. C. product costs. D. direct costs. - ANSWER C . The term "prime cost" refers to A. all manufacturing costs other than direct labor and raw material costs. B. all manufacturing costs incurred to produce units of output. C. raw material purchased and direct labor costs. D. the raw material used and direct labor costs. - ANSWER D The formula to compute cost of goods manufactured is A. direct material used plus direct labor plus overhead incurred. B. direct material used plus direct labor plus overhead incurred plus beginning Work in Process Inventory. C. beginning Work in Process Inventory plus purchases of raw material minus ending Work in Process Inventory. D. beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory. - ANSWER D The formula for cost of goods sold for a manufacturer is A. direct material plus direct labor plus overhead incurred plus beginning Work in Process Inventory. B. beginning Finished Goods Inventory