Choose the correct answer (you must show all necessary calculations)

1. A is a fixed cost; B is a variable cost. During the current year the level of activity has increased but is still within the relevant range. We would expect that:

A)

The cost per unit of A has remained unchanged. The cost per unit of B has decreased.

The cost per unit of A has increased.

The cost per unit of B has remained unchanged.

B) C) D)

2. Manufacturing overhead includes:

A) all direct material, direct labor and administrative costs.

B) all manufacturing costs except direct labor.

C) all manufacturing costs except direct labor and direct materials.

D) all selling and administrative costs.

3. Which of the following costs would not be included as part of manufacturing overhead?

A) Insurance on sales vehicles.

B) Depreciation of production equipment. C) Lubricants for production equipment. D) Direct labor overtime premium.