1. Overhead is underapplied if

a) Budgeted < Actual

b) Actual < Budgeted

c) Applied < Budgeted

d) Applied < Actual

2. Which of the following is not a factor affecting direct/indirect cost classifications?

a)	Materiality

b)	Information availability

c)	Type of business

d)	Design of operation

3. Which of the following is not true with respect to product costs vs. period costs?

a)	Period costs are expensed when the product is sold.

b)	Period costs are all costs in the income statement other than COGS.

c)	Product (inventoriable) costs inventoried when they are incurred.

d)	All manufacturing costs are inventoriable costs.

4. The correct equation to compute costs of goods manufactured (COGM) is:

a)	COGM = DM + DL + MO - BWIP - EWIP

b)	COGM = DM + DL + MO - BWIP + EWIP

c)	COGM = DM + DL + MO + BWIP + EWIP

d)	COGM = DM + DL + MO + BWIP - EWIP

5. A retail store has two separate sections: DVD and CD. Using each section as a cost object, which of the following classification is incorrect?

a)

	D or I	F or V
DVDs purchased for sale to customers	D	V

b)

	D or I	F or V
Store manager's salary	I	F

c)

	D or I	F or V
Annual retainer paid to DVD distributor	I	F

d)

	D or I	F or V
Subscription to DVD magazine	D	F

6. Which of the following is the correct equation to compute costs of goods sold (COGS)?

a)	Beginning FG + COGM + Ending FG

b)	Beginning FG + COGM - Ending FG

c)	COGM + Ending FG - Beginning FG

d)	COGM - Beginning FG - Ending FG