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SECTION B: MULTIPLE CHOICE QUESTIONS All of the following are factors affecting direct versus indirect cost classification EXCEPT: A ) materiality of the cost B
SECTION B: MULTIPLE CHOICE QUESTIONS
All of the following are factors affecting direct versus indirect
cost classification EXCEPT:
A materiality of the cost
B cost accuracy
C information technology's ability to trace costs in an
economically feasible way
D design of operations
Cost assignment:
A includes future and arbitrary costs
B associates accumulated costs with certain cost objects
C is the same as cost accumulation
D is the difference between budgeted and actual costs
Cost allocation is:
A the process of tracking both direct and indirect costs
associated with a cost object
B the process of determining the opportunity cost of a cost
object chosen
C the assignment of indirect costs to the chosen cost object
D made based on material acquisition document
When costs can be traced to a particular cost object in an
economically feasible way, the cost is a:
A direct cost
B indirect cost
C allocated cost
D budgeted cost
Indirect manufacturing costs:
A can be traced to the product that created the costs
B can be easily identified with the cost object
C generally include the cost of material and the cost of labor
D may include both variable and fixed costs
Which of the following is true of indirect costs?
A Indirect costs are always considered sunk costs.
B All indirect costs are included in cost of goods sold.
C Indirect costs always vary in direct proportion to the level
of production.
D Indirect costs cannot be traced to a particular cost object in
an economically feasible way.
Variable costs:
A are always indirect costs
B increase in total when the actual level of activity increases
C include most personnel costs and depreciation on
machinery
D are never considered a part of prime cost
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