Multiple Choices

For each question write only the letter that corresponds to your
Final Answer, any form of erasure will be considered wrong.

Use only one-fourth (1/4) sheet of paper, and number it

1.

11.

10.

20.

1. Unit Fixed Costs:

a. Are constant per unit regardless of units
produced or sold.
b.Are determined by dividing total fixed costs by
a denominator such as production or sales
volume.
c. Vary indirectly with activity levels when
stated on a per unit basis.
d.Include both fixed and variable costs.

2. Inventoriable costs:
a. Include only prime costs of manufacturing a
product.
b. Include only the conversion costs of
manufacturing a product.
c. Are expenses when products become parts
of finished goods.
d. Are regarded as assets before the
product are sold.

3. The wages of janitorial staff should

be classified as:
a.Factory overhead
b.Period cost
c.Direct labor cost
d.Prime cost

4. The cost of direct labor associated with

the manufacturing of product should be
expensed when the:
a. Labor is performed
b. Employees are paid
c. Product is transferred to finished goods
inventory
d. Product is sold

5. Wages paid to factory machine

operator of a manufacturing plant are:
a. Period cost
b. Direct Labor
c. Direct Materials
d. Factory overhead

6. Which of the following items is a

cost object?
a. customer order
b. project
c. division of the company
d. a, b and c

7. In a cost system, the distribution of factory

labor costs usually is recorded as an increase
in:
a. Factory Overhead Control
b. Marketing and Selling Expense
c. Work in Process
d. Both a and b

8. The cost that would normally classified as

common cost is:
a. Office Supplies
b. Real Property Tax
c. Depreciation of delivery equipment
d. Doubtful Account Expense

9. Janitorial Department provides cleaning

services to all departments of a large store.
The costs related to this department would
most likely be classified as:
a. Joint Cost
b. Common Cost
c. Product Cost
d. Irrelevant Cost

10. Which of the following statement/s is/are true:

S1: Lumber can be both a finished product and a
material.
S2: Product cost consists of the sum of prime cost
and conversion cost.
a. True, True
b. True, False
c. False, False
d. False, True

11. Which of the following statement/s is/are true:

S1: Total fixed cost decreased with increased in the
number of units produced and increased with
decreased in output.
S2: Period costs are found in both manufacturing
and merchandising firms.
a. True, True
b. True, False
c. False, False
d. False, True

12. Which of the following statement/s is/are true:

S1: A cost that is present under one alternative but
not in whole or part under another alternative is
known as differential cost.
S2: Like product costs, period costs are not
necessarily treated as expenses in the period in
which they are incurred.
a. True, True
b. True, False
c. False, False
d. False, True

13. A cost center in a process cost system is:

a. Department.
b. Job.
c. Specific product.
d. Employee.

14. A characteristic of a process cost accounting

system is:
a. Costs are accumulated by order.
b. Work in process inventory is restated in
terms of equivalent whole units.
c. It is used by company manufacturing custom
machinery.
d. None of these is correct.

15. Characteristics that job order costing and

process costing have in common include all of the
following except:
a. The use of predetermined factory overhead
rates.
b. Each can be used by service firms.
c. The costs of materials and labor are charged
to the departments where they are
incurred.
d. The primary objective is to complete a unit
cost for products.

16. Cost accounting differs from financial

accounting in that financial accounting:
a. Is mostly concerned with external financial
reporting.
b. Is mostly concerned with individual
departments of the company.
c. Provides the additional information required
for special reports to management.
d. Puts more emphasis on future operations.

17. Cost classifications are based on the

relationship of costs to all of the following
except:
a. ledger accounts
b. accounting periods
c. products
d. volume of production

18. Unit cost information is important for making

all of the following marketing decisions except:
a. Determining the selling price of a product.
b. Bidding on contracts.
c. Determining the amount of advertising
needed to promote the product.
d. Determining the amount of profit that each
product earns.

19. The method of analyzing cost behavior that

uses two data points to first determine the

variable cost per unit and then the total fixed
cost is the:
a. Method of least squares.
b. Scattergraph method.
c. High-low method.
d. Observation method.

20. Costs that change in relation to volume

changes, but not in direct proportion to those
changes, are known as:
a. Variable costs.
b. Semivariable costs.
c. Fixed costs.
d. Curvilinear costs.