Mid Term

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1. (TCO A)  Direct material cost is a part of: (Points : 6)        Conversion Cost YES.... Prime Cost NO
       Conversion Cost NO.... Prime Cost YES
      Conversion Cost YES.... Prime Cost YES
      Conversion Cost NO.... Prime Cost NO|
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2. (TCO A)  The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to be: (Points : 6)        direct costs. 
      sunk costs. 
      incremental costs. 
      None of the above. |

3. (TCO A)  Property taxes on a company's factory building would be classified as a(n): (Points : 6)        sunk cost
      opportunity cost
      period cost
      variable cost
      manufacturing cost|

4. (TCO A) Within the relevant range, variable costs can be expected to: (Points : 6)        vary in total in direct proportion to changes in the activity level.              remain constant in total as the activity level changes.        increase on a per unit basis as the activity level increases.         increase on a per unit basis as the activity level decreases.        none of these. |

5. (TCO F) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to: (Points : 6)        understate the predetermined overhead rate

      overstate the predetermined overhead rate
      have no effect on the predetermined overhead rate       cannot be determined from the information given|

6. (TCO F)  Under a job-order costing system, the product being manufactured: (Points : 6)        is homogeneous.
      passes from one manufacturing department to the next before being completed.        can be custom manufactured.
      has a unit cost that is easy to calculate by dividing total production costs by the units produced.|...
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