Part I: Multiple Choice 1. Which of the following costs are a component of production costs a. Prime Costs b. Period Costs c. Equivalent Costs d. Flotation Costs 2 Which of the following costs are a component of both prime costs and conversion costs? a. Materials b. Labor c. Overhead d. None of the above Which of the following is the best explanation of why equivalent units of production need to be computed? 3 a. It is necessary to appropriately separate prime costs and conversion costs. b. it is necessary to determine whether or not the efficiency variance is favorable or unfavorable. c. It is necessary to be able to calculate the cost of individual jobs. d. It is necessary to be able to calculate and assign cost per unit. Which of the following is the best explanation of why variance analysis needs to be computed? a. It is used to exercise control over the cost of the production process b. It is used to assign responsibility for mistakes. c. it is used to pre-test standard costs for future fiscal years. d. All of the above are reasons for computing variance analysis. Which of the following statements is true? a. A favorable variance always indicates that employees are performing efficiently. b. An unfavorable variance always indicates that there has been waste in material usec c. Sometimes, the best action to take regarding a variance is "no action." d. Variance analysis cannot be computed for overhead. 5