1-1 What are the three major types of product costs in a manufacturing company? 1-2 Define the following: (a) direct materials, (b) indirect materials, (c) direct labor, (d) indirect labor, and (e) manufacturing overhead. Explain the difference between a product cost and a period 1-3 cost. 1-4 Distinguish between (a) a variable cost, (b) a fixed cost, and (c) a mixed cost. 1-5 What effect does an increase in the activity level have on- a. Unit fixed costs ? b. Unit variable costs? c. Total fixed costs? d. Total variable costs? 16 Define the following terms: (a) cost behavior and (b) relevant range. 1-7 What is meant by an activity base when dealing with variable costs? Give several examples of activity bases. 18 Managers often assume a strictly linear relationship between d. Total variable costs? 16 Define the following terms: (a) cost behavior and (b) relevant range. 17 What is meant by an activity base when dealing with variable costs? Give several examples of activity bases. 1-8 Managers often assume a strictly linear relationship between cost and the level of activity. How can this practice be defended in light of the fact that many costs are curvilinear? 1-9 Distinguish between discretionary fixed costs and committed fixed costs. 1-10 Does the concept of the relevant range apply to fixed costs? Explain. 1-11 What is the difference between a traditional format income statement and a contribution format income statement? 1-12 113 What is the contribution margin? Define the following terms: differential cost, sunk cost, and opportunity cost. Only variable costs can be differential costs. Do you agree? Explain. 1-14