MGT 2642 Readiness Quiz 1

Which of the following statements about opportunity costs is not correct?

An opportunity cost cannot be changed by any decision made now or in the future.

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

Common Cost

The traditional income statement uses which of the following cost categories?

Cost of goods sold and selling and administrative expenses

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of the branch.

Direct Cost

Which of the following is common to both prime cost and conversion cost?

Direct Labor

________ is sometimes called "touch labor."

Direct Labor

Manufacturing Costs Include

Direct Labor Direct Material Manufacturing Overhead

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________.

Direct Materials

Because of automation, which component of product cost is declining?

Direct labor

Which of the following statements is true?

Fixed costs are constant in total dollars

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.

Indirect Cost

Which of the following is true of the contribution approach?

It separates costs into fixed and variable categories.

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

Manufacturing Overhead Costs

Property taxes associated with a company's administrative facility are considered

Nonmanufacturing Costs

How should the wages of a sheet metal worker in a fabrication plant be classified?

Product cost

Which of the following is always an irrelevant cost?

Sunk cost

Conversion costs consist of:

direct labor and manufacturing overhead

Costs that are not worth the effort to trace to a specific cost object are:

indirect costs

Manufacturing costs that cannot be classified as either direct materials or direct labor are known as

manufacturing overhead

Differential costs are always ________.

relevant in making business decisions

A fixed cost is a cost which ________.

remains constant in total with changes in the level of activity

If a firm increases its activity level, ____

some costs will change, other costs will remain the same

In the equation, Y = a + bX, X represents ________.

the level of activity