tion w 1 in direct propotion to changes in tne volume or levei of activityT 19 Vanable costs are costs that vary, in total 20 The planning honzon for a commited fixed cost usully encompasses many years contribution margin is the amount remaining from sales revenues ater vanable expenses have been deducted 25 A contribution format income statement for a me rchandising company org categories--cost of goods sold and selling and administrative expenses 26 The traditional format income statement provides managers with an income statement that cleary distinguishes between fxed and variable costs and therefore aids planning,control, and decision making 28. A traditional format income statement orpanizes costs on the basis of behavior 29. In a traditional format income statement for a merchandising company, the selling and administrative expenses report all period costs that have been expensed as incurred 30. The contribution format is widely used for preparing external financial statements Multiple Choice 34 The nursing station on the fourth floor of Central Hospital is responsible for the care of orthopedic surgery patients. The costs of prescription drugs administered by the nursing station to patients should be classifled as) A) direct patient costs B) Indirect patient costs C) overhead costs of the nursing station D) period costs of the hospital 36. The costs of the Accounting Department at Central Hospital would be considered by the Surgery Department to be A) direct costs B) indirect costs C) incremental costs D) opportunity costs 38. In a manufacturing company, direct labor costs combined with direct materials costs are known as A) period costs B) conversion costs C) prime costs D) opportunity costs 39. The property taxes on a factory building would be an example of Prime Cost Conversion Cost Yes No Yes No A) No B) Yes C) Yes D) No