1. Factory supervisor salaries should be classified as direct labor costs.

True

False

2. In a graph of variable costs, the slope of the line represents the variable cost per unit.

True

False

3. If a product line has sales of $500,000 and fixed manufacturing costs of $100,000 and variable manufacturing costs of $75,000 and fixed selling and administrative expenses of $50,000 and variable selling and administrative expenses of $60,000 then the contribution margin of the product line would be $365,000.

True

False

4. Once a company decides to apply overhead based on machine hours, the rate would be calculated as estimated overhead for the period divided by the actual machine hours used.

True

False

5. A disadvantage of absorption costing is that it might encourage a manager to overproduce inventory in order to get a favorable performance evaluation.

True

False