85) Depreciation on a personal computer used in the marketing department of a manufacturing company would be classified as:
A) a product cost that is fixed with respect to the company's output.
B) a period cost that is fixed with respect to the company's output.
C) a product cost that is variable with respect to the company's output.
D) a period cost that is variable with respect to the company's output.
Answer: B
Difficulty: 2 Medium
Topic: Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
86) Property taxes on a company's factory building would be classified as a(n):
A) product cost.
B) opportunity cost.
C) period cost.
D) variable cost.
Answer: A
Difficulty: 1 Easy
Topic: Cost Classifications for Preparing Financial Statements; Cost Classifications for Decision Making; Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 01-05 Understand cost classifications used in making decisions: differential costs, sunk costs, and opportunity costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
87) Factory overhead is typically a(n):
A) mixed cost.
B) fixed cost.
C) variable cost.
D) irrelevant cost.
Answer: A
Difficulty: 1 Easy
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
88) As the level of activity increases, how will a mixed cost in total and per unit behave?
In Total
Per Unit
A)
Increase
Decrease
B)
Increase
Increase
C)
Increase
No effect
D)
Decrease
Increase
E)
Decrease
No effect
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E
Answer: A
Difficulty: 2 Medium
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
89) The following data have been collected for four different cost items.
Cost Item
Cost at
100 units
Cost at
140 units
W
$
8,000
$
10,560
X
$
5,000
$
5,000
Y
$
6,500
$
9,100
Z
$
6,700
$
8,580
Which of the following classifications of these cost items by cost behavior is correct?
Cost W
Cost X
Cost Y
Cost Z
A)
variable
fixed
mixed
variable
B)
mixed
fixed
variable
mixed
C)
variable
fixed
variable
variable
D)
mixed
fixed
mixed
mixed
A) Choice A
B) Choice B
C) Choice C
D) Choice D
Answer: B
Difficulty: 3 Hard
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
90) Within the relevant range, variable costs can be expected to:
A) vary in total in direct proportion to changes in the activity level.
B) remain constant in total as the activity level changes.