Question 1: Wages paid to an assembly line worker in a factory are a:

• Prime Cost YES.....Conversion Cost NO
• Prime Cost YES.....Conversion Cost YES
• Prime Cost NO....Conversion Cost NO
• Prime Cost NO.....Conversion Cost YES

Question 2: A cost incurred in the past that is not relevant to any current decision is classified as a(n):

• period cost.
• incremental cost.
• opportunity cost.
• none of the above.

Question 3: Property taxes on a company's factory building would be classified as a(n):

• sunk cost
• opportunity cost
• period cost
• variable cost
• manufacturing cost

Question 4: When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to

• Increase No Change
• Increase Increase
• decrease No Change
• No Change Increase

Question 5: Which of the following statements is true?

I. Overhead application may be made slowly as a job is worked on.
II. Overhead application may be made in a single application at the time of completion of the job.
III. Overhead application should be made to any job not completed at year-end in order to properly value the work in process inventory.

• Only statement I is true
• Only statement II is true
• Both statements I and II are true
• Statements I, II, and III are all true

Question 6: Which of the following statements about process costing system isincorrect?

• In a process costing system, each processing department has a work in process account
• In a process costing system, equivalent units are separately computed for materials and for conversion costs
• In a process costing system, overhead can be under- or overapplied just as in job-order costing
• In a process costing system, materials costs are traced to units of products

Question 7: Equivalent units for a process costing system using the FIFO method would be equal to:

• units completed during the period, plus equivalent units in the ending work in process inventory
• units started and completed during the period, plus equivalent units in the ending work in process inventory
• units completed during the period and transferred out
• units started and completed during the period, plus equivalent units in the ending work in process inventory, plus work needed to complete units in the beginning work in process inventory

Question 8: The contribution margin ratio always increases when the:

• break-even point increases
• break-even point decreases
• variable expenses as a percentage of net sales decreases
• variable expenses as a percentage of net sales increases

Question 9: Which of the following would not affect the break-even point?

• number of units sold
• variable expense per unit
• total fixed expenses
• selling price per unit

Question 10: In an income statement prepared using the variable costing method, variable selling and administrative expenses would:

• be used in the computation of the contribution margin
• be used in the computation of net operating income but not in the computation of the contribution margin
• be treated differently from variable manufacturing expenses
• not be used