Chapter 1: Accounting for Decision Making

All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.

False

Variable costs remain fixed in total within the relevant range of activity

False.

Prime costs include

direct labor direct materials

Manufacturing overhead costs include ______.

indirect materials, factory supervisors' salaries, and factory depreciation

Within the relevant range of activity _________________________________.

costs and activity can be approximated by a straight line fixed costs remain constant in total

The components of prime costs are direct ______________costs and direct ____________________ costs.

materials, labor

Cost behavior ___________________

refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable

The assumption that cost behavior is strictly linear is reasonably valid within the __________________ ___________________ of activity.

relevant range

Within the relevant range of activity, variable costs ______.

remain constant per unit vary in total

How individual costs react to changes in activity level is referred to as cost

behavior