Question 12 2 pts Cost D can be physically traced to each unit of output. It should be classified as a direct cost with respect to each unit of output. . Cost I can be physically traced to each unit of output. It should be classified as an indirect cost with respect to each unit of output. Which of the following statements about the classification of D and I is most likely to be true? 1. Misclassifying D as an indirect cost would have a more negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying as a direct cost. 2. Misclassifying D as an indirect cost would have a less negative impact on the accuracy of cost assignment (to each unit of output) compared to misclassifying as a direct cost. 3. Misclassifying D as an indirect cost would have the same negative impact on the accuracy of cost assignment (to each unit of output) as misclassifying I as a direct cost. Statement 1 only Statement 2 only Statement 3 only Question 13 2 pts Which of the following statements regarding the allocation of cost from other departments to the operating departments) is/are likely to be true? 1. For a firm that only has a single department (Department X) that provides services to its multiple operating departments, the choice between direct vs step down vs reciprocal method is relevant when deciding how to allocate Department X's cost to the operating departments, 2. For a firm that only has a single operating department but multiple support departments, the choice of which method to use i.e., direct vs step down vs reciprocal) to allocate the support departments' cost to the operating department will impact the accuracy of the cost allocation. 3. Support department costs are more likely to be indirect costs and less likely to be direct costs) of the individual units of output produced by the operating departments. Statement 1 only 1 Statement 2 only Statement 3 only Statements 1 and 3 only Statements 2 and 3 only Question 14 2 pts Which of the following statements about operating leverage is/are likely to be true? 1. A firm with low operating leverage faces lower risk compared to a firm with higher operating leverage, all else being equal. 2. A firm should always try to minimise its operating leverage, all else being equal. 3. A manufacturing firm that uses more automation (and less human labour) would have a lower operating leverage compared to a firm that uses more human labour (and less automation), all else being equal. Statement 1 only Statement 2 only Statement 3 only Statements 1 and 2 only Statements 1, 2 and 3