Exam 2: An Introduction to Cost Terms and Concepts

Harry has just received his bachelor's degree and is considering two alternatives. (1) He could obtain an entry-level accounting position paying £30,000 per year. (2) He could obtain his master's degree with one more year of study and work part-time for £8,000 per year. The opportunity cost associated with Harry obtaining his master's degree is

Which statement describes step-cost behaviour?

Sunk costs are

Classify each of the following costs as variable, fixed, mixed, or step by writing an X under one of the following headings (Sales volume is the cost driver).

Unit costs are critical for

TEK, Inc., is considering whether to replace a production machine with a newer model of the same machine. If TEK keeps the old machine, the trade-in value of the old equipment is an example of a(n)

Which of the following costs incurred by a chair manufacturer would be traced to the product cost through direct tracing?

Fixed cost per unit is £9 when 20,000 units are produced and £6 when 30,000 units are produced. What is the total fixed cost when nothing is produced?

Variable costs,

Indirect costs are usually allocated rather than traced to cost objects because

Which of the following is an example of a possible cost object?

Which of the following costs is NOT recorded in the company's accounting system?

Which of the following costs would be classified as fixed costs with respect to volume?

The direct material cost is £10,000 when 2,000 units are produced. What is the direct material cost for 2,500 units produced?

Mulholland Company manufactures various wooden furniture products. If the cost object is a product, a chair, what costs would be considered direct?

A cost used up in the production of revenues is a(n)

If total warehousing cost for the year amounts to £350,000, and 40 per cent of the warehousing activity is associated with finished goods and 60 per cent with direct materials, how much of the cost would be charged as a product cost?

Which of the following costs is an example of product costs?

Which of the following costs is a period cost for a manufacturing company?

Prime product costs include