1.A is a fixed cost; B is a variable cost. During the current year the level of activity has decreased but is still within the relevant range. We would expect that: A) The cost per unit of A has remained unchanged. B) The cost per unit of B has decreased. C) The cost per unit of A has decreased. D) The cost per unit of B has remained unchanged.

2.Which costs will change with an increase in activity within the relevant range? A) Unit fixed cost and total fixed cost B) Unit variable cost and total variable cost C) Unit fixed cost and total variable cost D) Unit fixed cost and unit variable cost

3. Salaries of accounts receivable clerks when one clerical worker is needed for every 750 accounts receivable is an example of a: A) fixed cost B) step-variable cost C) mixed cost D) curvilinear cost

4. Limousine Conversion Company purchases ordinary Cadillacs, cuts them in half, and then adds a middle section to the vehicles to create stretch limousines. With respect to the number of cars converted, the cost of the Cadillacs purchased for conversion by Limousine Conversion Company would best be described as a: A) fixed cost B) mixed cost C) step-variable cost

D) variable cost

5. For an automobile manufacturer, the cost of a driver's side air bag purchased from a supplier and installed in every automobile would best be described as a: A) fixed cost. B) mixed cost. C) step-variable cost. D) variable cost.

6. With respect to a fixed cost, an increase in the activity level within the relevant range results in: A) an increase in fixed cost per unit. B) a proportionate increase in total fixed costs. C) an unchanged fixed cost per unit. D) a decrease in fixed cost per unit.

7.A budget that is based on the actual activity of a period is known as a: A) continuous budget. B) flexible budget. C) static budget. D) master budget.

8. The fixed manufacturing overhead budget variance equals: A) Actual fixed manufacturing overhead cost--Applied fixed manufacturing overhead cost. B) Actual fixed manufacturing overhead cost--Budgeted fixed manufacturing overhead cost. C) Budgeted fixed manufacturing overhead cost--Applied fixed manufacturing overhead cost. D) Actual fixed manufacturing overhead cost-- (Actual hours x Standard fixed overhead rate).

9. Which of the following variances is least significant from a standpoint of cost control? A) materials price variance. B) labor efficiency variance. C) fixed overhead volume variance. D) variable overhead spending variance.

10. The manufacturing overhead variance that is a measure of capacity utilization is: A) the overhead spending variance. B) the overhead efficiency variance. C) the overhead budget variance. D) the overhead volume variance.

11. If the denominator activity is less than the standard hours allowed for the actual output, one would expect that: A) the variable overhead efficiency variance would be unfavorable. B) the fixed overhead volume variance would be favorable. C) the fixed overhead budget variance would be unfavorable. D) the variable overhead efficiency variance would be favorable.

12. The volume variance is nonzero whenever: A) standard hours allowed for the output of a period differ from the denominator level of activity. B) actual hours differ from the denominator level of activity. C) standard hours allowed for the output of a period differ from the actual hours during the period. D) actual fixed overhead costs incurred during a period differ from budgeted fixed overhead costs as contained in the flexible budget.

13. A volume variance is computed for: A) both variable and fixed overhead. B) variable overhead only. C) fixed overhead only. D) direct labor costs as well as overhead costs.

14. Which of the following standard cost variances would usually be least controllable by a production supervisor? A) Fixed overhead volume variance. B) Variable overhead efficiency variance. C) Direct labor efficiency variance. D) Materials usage (quantity) variance. 15.During the year the balance in the prepaid expenses account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to: A) deduct the $6,000 from the operating expenses reported on the income statement. B) add the $6,000 to the operating expenses reported on the income statement. C) deduct the $6,000 from the cost of goods sold reported on the income statement. D) add the $6,000 to the cost of goods sold reported on the income statement.

16. In a statement of cash flows, all of the following would be classified as operating activities except: A) interest paid to creditors. B) dividends received on stock in another company held as an investment. C) dividends paid to the company's own common stockholders. D) interest received on a long-term note receivable.

17. In a statement of cash flows, a change in accounts payable account would be classified as: A) an operating activity. B) a financing activity. C) an investing activity. D) a noncash item that need not appear on the statement of cash flows.

18. A decrease in the plant and equipment account of $100,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as: A) an addition to net income of $100,000 in order to arrive at net cash provided by operating activities. B) a deduction from net income of $100,000 in order to arrive at net cash provided by operating activities. C) an addition of $100,000 under investing activities. D) a deduction of $100,000 under investing activities. 19. Which of the following should be classified as an investing activity on a statement of cash flows? A) cash received from the sale of office equipment that was sold at a loss. B) cash used to purchase a long-term investment in bonds of another corporation. C) cash received from the issuance of Iguato Corporation common stock. D) both A and B above E) all of the above

20. Which of the following should be classified as an investing activity on a statement of cash flows? A) cash paid for income taxes. B) cash paid for dividends to stockholders. C) cash paid to employees for services rendered. D) none of the above