The following case is related to questions 5 - 8:

A bakery manufactures two types of bread, whole-wheat and plain. The flour related to each type of bread is bought from different suppliers. Both types of bread use the same type of yeast. Raw materials are bought when needed by the production. Cleaning is done once every day regardless of the production volume. Indicate whether each expense is direct or indirect, fixed or variable assuming "units of production of each kind of bread" is the cost object.

5. Which of the following is the cost classification for the whole-wheat flour?

a) direct, variableb) direct, fixedc) indirect, variabled) indirect, fixede) direct, indirect

6. Which of the following is the cost classification for the yeast?

a) direct, variableb) direct, fixedc) indirect, variabled) indirect, fixede) direct, indirect

7. Which of the following is the cost classification for the depreciation of the ovens which are used to cook both types of bread?

a) direct, variableb) direct, fixedc) indirect, variabled) indirect, fixede) direct, indirect

8. Which of the following is the cost classification for the cleaning cost of the factory?

a) direct, variableb) direct, fixedc) indirect, variabled) indirect, fixede) direct, indirect

Indicate whether the statements 9 - 14 are true or false:

9. The cost of the good which is sold is equal to its inventory value.

a) trueb) false

10. Trade Goods is related to goods which are purchased for resale without making any modifications or additions.

a) trueb) false

11. Cost of goods sold is recognized when the product is manufactured.

a) trueb) false

12. Direct Labor is a cost component.

a) trueb) false

13. Direct costs are calculated by using an appropriate allocation method.

a) trueb) false

14. The variable total cost changes with respect to the volume of production.

a) trueb) false