1. Assume the electricity cost for a company has two components: 1) a small charge per month no matter how much electricity is used during that month (including no usage), and 2) a charge for every kilowatt hour used. This type of cost is known as a

a. variable cost.

b. fixed cost.

c. mixed cost.

d. step cost.

e. none of the above

____2. An example of a committed fixed cost is

a. Wages of hourly employees.

b. Sales commissions.

c. Plant depreciation expense.

d. The fee paid to an outside management consultant.

e. none of the above.

____3. When volume decreases, fixed costs will normally

a. decrease in total

b. decrease per unit

c. increase per unit

d. remain constant per unit

e. none of the above

____4. Product costs, which are the costs incurred in manufacturing a product, become an expense at the time the

a. costs are charged to workinprocess.

b. cost are incurred.

c. finished goods account is credited for the cost of goods sold.

d. payments are made for the costs.

e. none of the above

____5. The normal movement or flow of product costs in a manufacturing company is:

a. Direct materials, finished goods, workinprocess and cost of goods sold.

b. Direct materials, cost of goods sold, workinprocess and finished goods.

c. Direct materials, workinprocess, finished goods and cost of goods sold.

d. Cost of goods sold, direct materials, workinprocess and finished goods.

e. none of the above.