5. For purpose of prediction, costs should be classified into direct and indirect (2 Points) O True Fules 4. Which of the following is normally considered to be a period cost? * (5 Points) Advertising expense. Depreciation expenses of the machines. O Production Manager's salary. Insurance on a factory building Costs that remain the same over a wide range of activity, but jump to a different amount that range are termed variable costs.* (3 Points) True Fules All costs in a merchandising company are period costs. * (2 Points) O True Fules A variable cost is constant if expressed on a per unit basis but the total amount changes as the number of units increases or decreases. * (2 Points) O True Fules The relevant range is that range of activity: * (5 Points) Where a company achieves its maximum efficiency. O Where units produced equal units sold. O Where management expects the firm to operate. O Where the firm will earn a profit. Prime cost is the sum of direct labor and manufacturing overhead. * (2 Points) O True O Fules - Direct costs are often difficult to trace to the specific cost object under consideration. (2 Points) O True O Fules