Question 1. Classifying a cost as either direct or indirect depends upon:
a. whether the cost can be easily identified with the cost object
b. whether an expenditure is avoidable or not in the future
c. the behavior of the cost in response to volume changes
d. whether the cost is expensed in the period in which it is incurred
Question 2. Which one of the following items is a direct cost?
a. Utility costs of the administrative offices; the accounting department is the cost object.
b. Customer-service costs of a multiproduct firm; Product A is the cost object.
c. Printing costs incurred for payroll check processing; payroll check processing is the cost object.
d. The salary of a maintenance supervisor in a multiproduct manufacturing plant; Product B is the cost object.
Question 3. Variable costs:
a. can always be traced directly to the cost object
b. increase in total when the actual level of activity increases
c. include most personnel costs and depreciation on machinery
d. are always indirect costs
Question 4. Indirect manufacturing costs:
a. may include both variable and fixed costs
b. can be easily identified with the cost object
c. generally include the cost of material and the cost of labor
d. can be traced to the product that created the costs
Question 5. Fixed costs:
a. can be adjusted in the short run to meet actual demands
b. vary with production or sales volumes
c. include parts and materials used to manufacture a product
d. may include either direct or indirect costs