I. Multiple choice questions- (Give the most correct answer for the statement from the choices)

1. Which of the following is most likely to be a variable cost?

a. Depreciation

b. The cost of material used in production.

c. Rent

d. Advertising

2. Which of the following is most likely to be a fixed cost?

a. Royalty paid on the basis of production.

b. Rent

c. Wages paid to assembly workers

d. Commission.

3. Costs incurred in the past are:

a. Opportunity costs.

b. Direct costs.

c. Sunk costs.

d. Variable costs.

4. The Salary a student forgoes while in college is an example of:

a. Opportunity cost.

b. Direct cost

c. Sunk cost

d. Prime cost

5. When production decreases from 1000 to 999 units the cost decreased from $ 51,000 to $50,000; then the decrease of $1,000 is:

a. Incremental cost

b. Marginal cost

c. Average cost

d. Indirect cost