1. EE Manufacturing makes a full line of exercise equipment. Which of the following costs would be considered part of EE's manufacturing overhead? (Select the six that apply.)

• a. Insurance on the factory building.
• b. Salary of the quality control inspector.
• c. Setup cost to change from one piece of equipment to another.
• d. Cost of shipping equipment to customers.
• e. Freight cost paid to get raw materials.
• f. Wages of employees who assemble the product.
• g. Factory supervisors' salaries.
• h. Cost of the oil used to cut metal tubing.
• i. Research cost incurred to develop new types of equipment.
• j. Depreciation on the factory equipment.

2. . Direct materials cost is considered a unit-related cost.

• True
• False

3. If a manufacturer's cost of direct materials increases, the breakeven point will:

• a. Stay the same.
• b. Increase.
• c.Not determinable.
• d. Decrease.

4. . Utica is a manufacturing firm that is considering whether to keep its accounting department or outsource the accounting function to an overseas-based accounting firm. If it outsources, it will lay off the existing accounting staff. Which of the items below would be relevant to the decision? (Select the four that apply.)

• a. CEO's salary.
• b. Fees charged by the accounting firm.
• c. Existing internal accounting staff's salaries.
• d, Depreciation on the corporate facilities.
• e. Risk of higher taxes because the new firm may not be familiar with U.S. tax law.
• f. Reduced cost of office supplies.
• g. Advertising cost.

5. Because opportunity costs are associated with alternatives not taken, they should not be included in relevant cost analysis.

• True
• False