Exercise 5: QCM 1. Which of the following describes the term "cost unit"? A. B. C. D. A basis for cost classification A production or service department A unit of product or service The cost of a unit of output 2. What is a cost centre? A. B. C. A unit of product or service in relation to which costs are ascertained An amount of expenditure attributable to an activity A production or service location, function, activity or item of equipment for which costs are accumulated A business unit or department where management makes investment decision D. 3. What is a prime cost? A. All costs incurred in manufacturing a product B. Tne total of direct costs C. The material cost of a product D. The cost of operating a department 4. Which of the following costs are part of the prime cost for a manufacturing company? A. B. C. D. The cost of raw materials that go in to the product wages of factory workers engaged in machine maintenance Depreciation of lorries used for deliveries to customers Cost of indirect production materials 5. Which of the following are indirect costs? i. The depreciation of maintenance equipment ii. The overtime premium incurred at the specific request of a customer iii. The hire of a tool for a specific job A. i only B. i and ii only C. ii and ii only D. all of them