APSC 221 Chapter 1-6 Exam Questions With
Correct Answers
Fixed cost - ANSWER those unaffected by changes in activity level over a feasible range
of operations for the capacity or capability available
Ex. Insurance, general management and administration salaries
disbursement - ANSWER money spent
receipt - ANSWER money recieved
Variable cost - ANSWER those associated with an operation that varies in total with the
quantity of output or other measures of activity level
Ex. Cost of material used
Incremental cost - ANSWER the additional cost (or revenue) that results from increasing
the output of the system by one (or more) units
Ex. Cost of adding another production line
Direct costs: - ANSWER costs that can be reasonably measured and allocated to a
specific output or work activity
Ex. Labour and material costs directly associated with a product
, Indirect costs - ANSWER costs that are difficult to allocate to a specific output or work
activity
Ex. Cost of common tools, general supplies, equipment maintenance
Overhead - ANSWER plant operations costs that are not direct labour or direct material
costs
Ex. Electricity, general repairs, property taxes
Cash cost - ANSWER a cost that involves the payment of cash
Book cost - ANSWER a cost that does not involve the payment of cash
Ex. The depreciation charged for the use of plant and equipment
Sunk cost - ANSWER a cost that has occurred in the past and has no relevance to
estimates of future costs and revenues related to an alternative course of action
Ex. cost of installing a machiene
Opportunity cost - ANSWER the cost of the best rejected opportunity and is often
hidden or implied
Utility - ANSWER the power to satisfy human wants and needs
Correct Answers
Fixed cost - ANSWER those unaffected by changes in activity level over a feasible range
of operations for the capacity or capability available
Ex. Insurance, general management and administration salaries
disbursement - ANSWER money spent
receipt - ANSWER money recieved
Variable cost - ANSWER those associated with an operation that varies in total with the
quantity of output or other measures of activity level
Ex. Cost of material used
Incremental cost - ANSWER the additional cost (or revenue) that results from increasing
the output of the system by one (or more) units
Ex. Cost of adding another production line
Direct costs: - ANSWER costs that can be reasonably measured and allocated to a
specific output or work activity
Ex. Labour and material costs directly associated with a product
, Indirect costs - ANSWER costs that are difficult to allocate to a specific output or work
activity
Ex. Cost of common tools, general supplies, equipment maintenance
Overhead - ANSWER plant operations costs that are not direct labour or direct material
costs
Ex. Electricity, general repairs, property taxes
Cash cost - ANSWER a cost that involves the payment of cash
Book cost - ANSWER a cost that does not involve the payment of cash
Ex. The depreciation charged for the use of plant and equipment
Sunk cost - ANSWER a cost that has occurred in the past and has no relevance to
estimates of future costs and revenues related to an alternative course of action
Ex. cost of installing a machiene
Opportunity cost - ANSWER the cost of the best rejected opportunity and is often
hidden or implied
Utility - ANSWER the power to satisfy human wants and needs
