QUESTION 3

1. Frisco Company's accounting records reflect the following inventories:

   Dec. 31, 2019 Dec. 31, 2018

   Raw materials inventory $310,000 $260,000

   Work in process inventory 330,000 160,000

   Finished goods inventory 540,000 250,000

   During 2019, $800,000 of raw materials were purchased, direct labor costs amounted to $670,000, and manufacturing overhead incurred was $640,000. Assume that all raw materials are direct materials. Friscos cost of goods sold for the year is

   	a.	$1,500,000.
   	b.	$1,350,000.
   	c.	$790,000.
   	d.	$1,600,000.

1 points

QUESTION 4

1. For an activity base to be useful in cost behavior analysis,

   	a.	the activity level should be constant over a period of time.
   	b.	the activity should always be stated in dollars.
   	c.	the activity should always be stated in terms of units.
   	d.	there should be a correlation between changes in the level of activity and changes in costs.