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# Accounting: Multiple choice questions.

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At a sales volume of 38,000 units, Tirri Corporation's property taxes (a cost that is fixed with respect to sales volume) total \$733,400.
To the nearest whole dollar, what should be the total property taxes at a sales volume of 37,200 units? (Assume that this sales volume is within the relevant range.)

\$725,680
\$733,400
\$749,172
\$717,960

2. Cost distortion is common in conventional costing systems because:
of the recent change in cost structure
the number of products being manufactured is increasing
fixed costs are allocated using a volume measure
fixed costs create higher risks for a company

3. Leas Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with respect to the number of calls in a month. At a volume of 25,000 calls in a month, the costs of operating the helpline total \$452,500.
To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)

\$442,545
\$452,500
\$473,326
\$432,590

4. The fixed portion of the cost of electricity for a manufacturing plant is:
a. Period cost
b. Product cost

a. Yes, b. No
a. Yes, b. Yes
a. No, b. Yes
a. No, b. No

5. Chezpere Company manufactures and sells washing machines. In order to make assembly of the machines faster and easier, some of the metal parts in the machines are coated with grease. How should the cost of this grease be classified?
a. Direct Material Cost
b. Fixed Cost

a. Yes, b. Yes
a. Yes, b. No
a. No, b. Yes
a. No, b. No

6. Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
The salary that Mark earns at his present employ is:

a variable cost
a fixed cost
a product cost
an opportunity cost

7. Costs that must be allocated to products for external reporting purposes include:
selling and marketing costs
direct material and direct labor costs
the cost of equipment used to manufacture several different products
All of these are correct.

8. Direct costs:
are incurred to benefit a particular accounting period.
are incurred due to a specific decision.
can be easily traced to a particular cost object.
are the variable costs of producing a product.

9. An example of a cost object is:
a bicycle
an individual fast food franchise
the produce department of a grocery store
All of the above are correct.

10. Haala Inc. is a merchandising company. Last month the company's cost of goods sold was \$68,000. The company's beginning merchandise inventory was \$11,000 and its ending merchandise inventory was \$17,000. What was the total amount of the company's merchandise purchases for the month?
\$96,000
\$62,000
\$68,000
\$74,000

11. The annual insurance premium for the factory building would be a: fixed cost, period cost, and indirect cost with regard to units of product.
fixed cost, product cost, and direct cost with regards to units of product.
variable cost, product cost, direct cost with regard to units of product.
fixed cost, product cost, indirect cost with regard to units of product.

12. Indirect manufacturing costs:
can be traced to the product that created the costs
may have a cause-and-effect relationship with capacity rather than with individual units of production
generally include the cost of material and the cost of labor
are included in period costs

13. A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the:
material used to make the hockey sticks
labor to bind the shaft to the blade of the hockey stick
shift supervisor for the hockey line
plant supervisor

14. The terms "direct cost" and "indirect cost" are commonly used in cost accounting. Classifying a cost as either direct or indirect depends upon:
the behavior of the cost in response to volume changes
whether the cost is expended in the period in which it is incurred
whether the cost can be related readily to resources consumed for a cost object
whether an expenditure is unavoidable because it cannot be changed regardless of any action taken

15. Cost behavior refers to:
how costs react to a change in the level of activity
whether a cost is incurred in a manufacturing, merchandising, or service company
classifying costs as either product or period costs
whether a particular expense has been ethically incurred

16. At a sales volume of 20,000 units, Choice Corporation's sales commmissions (a cost that is variable with respect to sales volume) total \$132,000.
To the nearest whole dollar, what should be the total sales commissions at a sales volume of 18,400 units? (Assume that this sales volume is within the relevant range.)

\$126,720
\$132,000
\$121,440
\$143,478

17. Within the relevant range, as the number of units produced increases:
the variable cost per unit remains the same.
fixed costs in total remain the same.
variable costs increase in total.
all of these.

18. An example of a cost object is:
a product
a customer
a department
All of these are correct.

19. An example of a fixed cost that would be considered a direct cost is:
a cost accountant's salary when the cost object is a unit of product.
the rental cost of a warehouse to store a finished goods when the cost object is the Purchasing Department.
a production supervisor's salary when the cost objective is the Production department.
Board of Director's fees when the cost object is the Marketing Department.

20. Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
The cost of the raw materials that will be used in manufacturing the computer board is:

a sunk cost
a fixed cost
a period cost
a variable cost