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Choose the best answer.
1. Which of the following statements is true?
A) The word "cost" has the same meaning in all situations in which it is used.
B) Cost data, once classified and recorded for a specific application, can then be used in any application.
C) Different cost concepts and classifications are used for different purposes.
D) All organizations incur the same types of costs.
E) Costs incurred in one year are always meaningful in the following year.
2. Which of the following is not an example of a variable cost?
A) Straight-line depreciation on a machine expected to last five years.
B) Piece-rate wages paid to manufacturing workers.
C) Tires used to produce tractors.
D) Lumber used to make patio furniture.
E) Commissions paid to sales personnel.
3. The tuition that is paid this semester by a college student who pursues a degree is a(n):
A) sunk cost.
B) out-of-pocket cost.
C) opportunity cost.
D) average cost.
E) marginal cost.
4. The variable costs per unit are $4 when a company produces 10,000 units of product. What are the variable costs per unit when 8,000 units are produced?
5. Costs that can be easily traced to a specific department are called:
A) direct costs.
B) indirect costs.
C) product costs.
D) manufacturing costs.
E) processing costs.
6. Which of the following employees of a commercial printer/publisher would be classified as direct labor?
A) Book binder.
B) Plant security guard.
C) Sales representative.
D) Plant supervisor.
E) Payroll supervisor.
7. Which of the following costs is not a component of manufacturing overhead?
A) Indirect materials.
B) Factory utilities.
C) Factory equipment.
D) Indirect labor.
E) Property taxes on the manufacturing plant.
8. Product costs are:
A) expensed when incurred.
C) treated in the same manner as period costs.
D) always variable in nature.
E) always fixed in nature.
9. Which of the following is a period cost?
A) Direct material.
B) Advertising expense.
C) Depreciation on cars driven by a firm's president and treasurer.
D) Miscellaneous supplies used in production activities.
E) Both B and C.
10. Which of the following entities would most likely have raw materials, work in process, and finished goods?
A) Exxon Corporation.
B) Macy's Department Store.
D) Southwest Airlines.
E) Columbia University.
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