In the Strategic Cost Management book of Payongayong page 43-48

Che tar Cost Co lasslcau .159 a y I. TRUE OR FALSE , Write \"True" if the statement is true and write \"False" if the statement is false. 1. Manufacturing overhead combined with direct materials is known as conversion cost. ' 2. Non-manufacturing costs consist of selling costs and administrative costs. 3. A variable cost will change in total in proportion to changes in the level of activity. 4. A xed cost is constant per unit of product. . 5. Manufacturing overhead is an indirect cost with respect to units of product. . A _. 6. A cost object is the monetary measure of a resource used or foregone to achieve a specic purpose. ,' The cost objective is defined as any purpose for accumulating costs. The major purpose for using cost objects is to aid management planning and control. Cost accumulation, cost allocation, and cost objects are interrelated. 10. An activity index is the activity that causes changes in the behavior of costs. . 11. Fixed cost per unit remains constant at various levels of activity. , 12. A variable cost remains constant per unit, though in total increases as activity, levels increase. 13. If volume increases, both total variable and total fixed costs will increase. 14. If the activity level decreases, xed costs per unit will decrease. , 15. Decreases in the level of activity will cause total variable and total fixedcosts to decrease. 16. An assumption regarding cost behavior is that two cost drivers are used for a given cost. 17. Cost behavior is the impact that a cost driver has on a cost . 18. Variable cost changes in total in direct proportion to changes in activity or output. . 19. When graphed, total variable costs and total fixed costs are both assumed to be linear within the relevant range. - __ . 20. Fixed cost is constant in total amount regardless of changes in activity level within the relevant range. . . - p . 21. Cost function is an expression that mathematically links costs, their behavior, and their cost dnver. 22. As volume decreases within the relevant range, variable cost per unit remains the same and fixed cost per unit increases. 23. When making predictions, variable costs and fixed costs should be thought of on a per unit basis. , ' . . ' . _ 24. Within the relevant range, the amount of variable cost per unit remains constant at each volume level. _ 25.The relevant range of activity is the activity level at which the company makes the highest amount of prots. 26.Fixed costs per unit decline as the activity level increases within the relevant range of activity. 27.The variable cost'element of a mixed cost is the amount that total costs increase for each additional unit of activity. . 28.A period cost is dened as the cost incurred when asset is used up or sold for the purpose of generating revenue. 29. Average cost is the total cost to produce the products is divided by the number of units manufactured or produced. _ - . . - . . 30. Opportunity costs could be defined as the revenue lost when one alternative is not taken in favor of another altemative. 339.\" H.' MULTIPLE CHOICE QUESTIONS . Identify the letter of the choice that best completes the statement or answers the question, 1. The term "relevant range\" in cost accounting means the range over Wthh a. costs may fluctuate. b. cost relationships are valid. (2. Production may vary. d. relevant costs are incurred. 2. Which of the following defines variable cost behavior? Total cost reaction Cost per unit reaction to increase in activig to increase in admit}: a. remains constant remains constant 1). remains constant increases c. increases increases d. increases remains constant 3. When cost relationships are linear, total variable prime costs will vary in proportion .0 changes in a. direct labor hours. b. total material cost. c. total overhead cost. d. Production volume. 4. Which of the following would not generally be considered a fixed overhead cost? Straight-line Factory Units-of-production depreciation insurance Depreciation a. no no no b. yes no yes c. yes yes no d. no yes no 5. A cost that remains constant in total but varies on a per-unit basis with chm as in activityis called a(n) ' 8 h a. expired cost. b. fixed cost. c. variable cost. (1. mixed cost. mu be reected as am) the most significant change in unit \"t a increase 111 the fixed element b. decrease in the variable element :1 increase in the mixed element. qummmmpm . '5 Which of the following always has 0 direct cause-effect relationship to a cost? a. yes yes [1. yes no C. \"0 yes \\l. \"0 no A cost driver fl; a. causes fixed costs to rise because of production changes. b. has a direct causeveifect relationship to a cost. c. can predict the cost behavior of a variable, but not a fixed cost. . d. is an overhead cost that causes distribution costs to change in distinct increments with changes in production volume. 9. Product costs are deducted from revenue a. as expenditures are made. b. when production is completed. c. as goods are. sold. d. to minimize taxable income. 10. Period costs a. are generally expensecl in the same period in which they are incurred. b. are always variable costs. c. remuin unchanged over a given period of time. d. are associated with the periodic inventory method. 11. The distinction between direct and indirect costs depends on whether a cost a. is controllable or non-controllable. b. Is variable or fixed. c. can be conveniently and physically traced to a cost object under consideration. d. will increase with changes in levels of activity. 12. Good Service, Inc. is a construction company that builds houses on Special request, What is the proper classification of the carpenters' wages? Product Period Direct .3. yes yes no b. yes no yes c. no no no d no yes yes 13. Good Service, Inc. is a construction company that builds houses on special request. What is the proper classification ot' the cost of the cement building slab used? Klimt 519$ a. no "0 b. no yes c. yes yes d. yes no a \"i N. All costs related to the manufacturing function in a company are a. prime costs. b. dintt costs. c. product costs. d. Conversion costs. l5. The term \"prime cost" refers to a. all manufacturing cost ' ' raw material purchased and direct labor costs. d. the raw material used and direct labor costs. 16. In relationship to changes in activity, variable overhead changes in total per unit a. no no b. no yes c. yes yes d. yes no 17. In relationship to changes in activity, fixed overhead changes in total Per unit a. yes yes b. no no c. no yes d. yes no 18. If the level of activity increases, a. variable cost per unit b. fixed cost per unit an c. total cost will increa (1. variable cost per and total fixed costs increase. d total variable cost increase. se and fixed cost per unit w ill decrease. ' unit and total cost increase. 19. Weaknesses of the high-low method include all of the a. only two observations are used to develop the cost function. h. the high and low activity levels may not be representative. c. the method does not detect if the cost behavior is nonlinear. d. the mathematical calculations are relatively complex. following except 20. If there is no "a" value in a linear cost equation, this indicates that the cost is a. fixed. h. mixed. c. variable. (I. either fixed or mixed. 2]. Which of the following statements about indirect costs is false? it. They cannot be traced easily to products or services. ls. They are also referred to as support costs (7. They are actually a subset of direct costs ______________4 c 3' on 8 ' 38 avior d, They are also referred to as overhead. 22. Depreciation of plant facilities is classified as a a. direct material cost b. direct labor cost c. manufacturing support cost d. general and administrative costs 23, Direct labor costs are likely to be important in plants that have a high investment in machinery and equipment very little automation an emphasis on better customer service a proliferation of multiple products 9-997? 24. As volume changes within the relevant range, there would be: a. changes in total variable costs and fixed costs per unit b. no changes in variable costs per unit and xed costs per unit c. changes in total fixed costs and total variable costs d. no change in total fixed costs and total variable costs 25. As volume decreases within the relevant range, variable costs would: a. increase per unit b. decrease per unit c. increase in total d. decrease in total 26. A company produced in one month 16,000 units at total variable costs of P16,000. lf 25,000 units are produced in the following month, the variable costs would be: a. P16,000 in total b. R64 per unit c. P15,000 in total (I. P25,000 27. If the production level decreases by 20%, then the unit variable cost a. Decrease by 20% b. Increase by 20%. c. Remains constant d. Increases by less than 20% 28. Which one of the following statements is correct? a. Direct costs are variable costs. b. Variable costs are direct costs. c. Direct costs are costs that can be traced directly to final products. d. Indirect costs are not manufacturing costs. 29. Period costs are: a. treated the same as non-manufacturing costs. b. treated the same as manufacturing costs. '0 Ia sircato sand 9 avior c. treated as expenses in the period in which the products they are'related to are sold. d. treated the same as prime costs. 30. Which of the following is a true regarding product and/ or period. co ts?' a. Period costs never appear on the balance sheet. . - b. Product costs appear on the income statement but never on the balance sheet, c. Period costs appear first on the balance sheet and then later on the know; statement. - ' ' (1. Neither product nor period costs ever appear on the balance sheet. 31. The terms "direct cost\" and \"indirect cost\" are commonly used in cost accounting Classifying a cost as either direct or indirect depends upon a. the behavior of the cost in response to volume changes b whether the cost is expended in the period in which-it is incurred . c. whether the cost can be related readily to resources consumed for that product ' d whether an expenditure is unavoidable because it cannot be changed regardlesS of any action taken. . . - . . . Unit costs associated with the sale of a Product AA101 Direct materials ' , ' . P 230.00 Direct labor 120.00 Manufactung support costs 460.00 Sales staff salaries 190.00 Total P1 00 . 0 32. Direct costs per unit of AA101 are: a. P540.00 b. P580.00 c. P350.00 d. P310.00 33. Indirect costs per unit of AA101 are: a. P1,000.00 b. P650.00 c. P540.00 d P580.00 34. Non-manufacturing support costs per unit of AA101 are: a. P190.00 b. P554000 c. P131000 d. P650.00 35. Total Manufacturing costs per unit of AA101 are: ' r a. P581100 b. P1,000 c. P650.00 d P810.00