Chapter 2 test bank with answers Horngren\'s Cost Accounting: A Managerial Emphasis, 16th Global Edition PDF

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Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren)Chapter 2 An Introduction to Cost Terms and Purposes2 Objective 2. Which of the following would be considered an actual cost of a current period? A) The $25 of materials in a manufactured chair that is ready to be shipped to the c...

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Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren) Cha pt e r2 AnI nt r oduc t i ont oCos tTe r msa ndPur pos e s 2 . 1 Obj e c t i ve2. 1 1 )Whi c hoft hef ol l owi ngwoul dbec ons i de r e dana c t ua lc os tofac ur r e ntpe r i od? A)The$ 25ofma t e r i al si namanuf ac t ur e dc ha i rt ha ti sr e a dyt obes hi ppe dt ot hec us t ome r B)The$ 22ofdi r e c tma t e r i alc os tpe runi ta s s ume di nt hea c t ua lbudge tofama nuf ac t ur e rofc ha i r s C)Thee xpe c t e dc os tofma t e r i a l sf orac ha i ra sar e s ul tofe ngi ne e r i ngs pe c i fic a t i ons D)Thea ve r a geofhi s t or i c a lma t e r i a lc os tda t af orac ha i rmanuf ac t ur e di ns e ve r a lpa s tac c ount i ngpe r i ods Ans we r :A Di ff: 2 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

2 )Thec ol l e c t i onofc os tda t ai nanor ga ni z e dwa y ,s uc hasi nva r i ousc a t e gor i e ss uc hasma t e r i al s ,l abor , a ndmanuf ac t ur i ngove r he a d,i sc a l l e d: A)c os ta ppl i c a t i on B)c os ta c c umul a t i on C)c os tas s i gnme nt D)c os tr e por t i ng Ans we r :B Di ff: 2 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

3 )Budge t e dc os t sar e_ __ _ __ _ _ . A)t hec os t si nc ur r e dt hi sye a r B)t hec os t si nc ur r e dl as tye a r C)pl anne dore xpe c t e dc os t s D)c ompe t i t or ' sc os t s Ans we r :C Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

4 )Cos ta s s i gnme nt_ _ __ _ __ _ . A)i nc l ude sf ut ur eandar bi t r ar yc os t s B)a s s oc i a t e sa c c umul a t e dc os t swi t hc e r t a i nc os tobj e c t s C)i st hes a mea sc os tac c umul a t i on D)i st hedi ffe r e nc ebe t we e nbudge t e danda c t ualc os t s Ans we r :B Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

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5 )Ac os ts ys t e m de t e r mi ne st hec os tofac os tobj e c tby_ __ _ __ __ . A)ac c umul a t i ngandt he nas s i gni ngc os t s B)a c c umul a t i ngc os t s C)as s i gni nga ndt he nac c umul a t i ngc os t s D)as s i gni ngc os t s Ans we r :A Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

6 )Ac os tobj e c ti sanyt hi ngf orwhi c hac os tme as ur e me nti sde s i r e d. Ans we r :TRUE Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

7 )Cos t sa r ea c c ount e df ori nt wobas i cs t a ge s :a s s i gnme ntf ol l owe dbya c c umul a t i on. Ans we r :F ALSE Expl a na t i on:Cos t sa r ea c c ount e df ori nt woba s i cs t a ge s :a c c umul a t i onf ol l owe dbya s s i gnme nt . Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

8 )Ana c t ua lc os ti st hec os ti nc ur r e d–ahi s t or i c a lorpas tc os t . Ans we r :TRUE Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

9 )Ac c ount a nt sde fineac os ta st hea mountofmone ys pe ntonar e s our c e . Ans we r :F ALSE Expl a na t i on:Ac os ti sar e s our c es a c r i fic e dorf or e goneandt her e qui r e me ntof" s pe ndi ng"orc a s h e xpe nde di snotpa r toft hede fini t i on. Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

1 0 )Ac os ti sar e s our c es a c r i fic e dorf or gonet oa c hi e veas pe c i ficobj e c t i ve . Ans we r :TRUE Expl a na t i on:Ac os tobj e c tc oul dbea nyt hi ngmana ge me ntwi s he st ode t e r mi net hec os tof ,f ore x ampl e ,a de pa r t me nt . Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

1 1 )Ma na ge r sus ea s s i gne dc os ti nf or ma t i ont omakede c i s i onsa ndi mpl e me ntt he m. Ans we r :TRUE Di ff: 1 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

1 2 )Luc a sManuf a c t ur i ngha st hr e ec os tobj e c t st ha ti tus e st oac c umul a t ec os t sf ori t smanuf a c t ur i ng pl a nt s .The ya r e : Cos tobj e c t# 1: Cos tobj e c t# 2: Cos tobj e c t# 3:

Thephys i c albui l di ngsande qui pme nt Theus eofbui l di ngsa nde qui pme nt Thea vai l abi l i t yandus eofma nuf a c t ur i ngl abor 2 Copyright © 2018 Pearson Education, Ltd.

Thef ol l owi ngmanuf a c t ur i ngove r he a dc os tc a t e gor i e sa r ef oundi nt hea c c ount i ngr e c or ds : a . De pr e c i a t i ononbui l di ngsa nde qui pme nt b . Lubr i c a nt sf ormac hi ne s c . Pr ope r t yi ns ur anc e d. Supe r vi s or ss a l a r i e s e . Fr i ngebe ne fit s f . Pr ope r t yt ax e s g. Ut i l i t i e s Re qui r e d: As s i gne ac hoft hea bovec os t st ot hemos ta ppr opr i a t ec os tobj e c t . Ans we r :Cos tobj e c t#1i nc l ude sc a t e gor i e sa ,c ,a ndf . Cos tobj e c t#2i nc l ude sc a t e gor i e sbandg. Cos tobj e c t#3i nc l ude sc a t e gor i e sda nde . Di ff: 2 Obj e c t i ve :1 AACSB:Appl i c a t i onofknowl e dge

2 . 2 Obj e c t i ve2 . 2 1 )Whi c hoft hef ol l owi ngf a c t or sa ffe c tt hedi r e c t /i ndi r e c tc l as s i fic a t i onofac os t ? A)t hel e ve lofbudge t e dpr ofitf ort hene x tye a r B)t hee s t i ma t i onoft i mer e qui r e dt oc ompl e t et heor de r C)t hea bi l i t yt oe x e c ut eanor de ri nt hemos tc os t e ffic i e ntmanne r D)t hede s i gnwhe r eapar t i c ul a ra r e ai sde di c a t e dt oas pe c i ficc os tobj e c t Ans we r :D Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

2 )Al loft hef ol l owi nga r ef ac t or sa ffe c t i ngdi r e c tve r s usi ndi r e c tc os tc l a s s i fic a t i one x c e pt : A)ma t e r i al i t yoft hec os t B)c os ta c c ur ac y C)i nf or ma t i ont e c hnol ogy' sa bi l i t yt ot r a c ec os t si na ne c onomi c al l yf e a s i bl ewa y D)de s i gnofope r a t i ons Ans we r :B Di ff: 2 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

3 )Whe nc os t sc a nbet r a c e dt oapa r t i c ul a rc os tobj e c ti na ne c onomi c al l yf e a s i bl ewa y ,t hec os ti sa : A)di r e c tc os t B)i ndi r e c tc os t C)al l oc a t e dc os t D)budge t e dc os t Ans we r :A Di ff: 2 Obj e c t i ve :1 AACSB:Anal yt i c a lt hi nki ng

4 )Whi c hoft hef ol l owi ngs t a t e me nt sa boutt hedi r e c t /i ndi r e c tc os tc l a s s i fic a t i oni st r ue ? A)I ndi r e c tc os t sa r eal wa yst r a c e d. B)I ndi r e c tc os t sar ea l wa ysa l l oc a t e d. 3 Copyright © 2018 Pearson Education, Ltd.

C)Thede s i gnofs al e st a r ge ta ffe c t st hedi r e c t /i ndi r e c tc l a s s i fic a t i on. D)Thedi r e c t /i ndi r e c tc l as s i fic a t i onde pe ndsont hec os tc ont r olme a s ur e s . Ans we r :B Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

5 )Cos tt r ac i ngi s_ _ __ _ __ _ . A)t hea s s i gnme ntofdi r e c tc os t st ot hec hos e nc os tobj e c t B)af unc t i onofc os tal l oc a t i on C)t hepr oc e s soft r a c ki ngbot hdi r e c tandi ndi r e c tc os t sa s s oc i a t e dwi t hac os tobj e c t D)t hepr oc e s sofde t e r mi ni ngt hea c t ualc os toft hec os tobj e c t Ans we r :A Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

6 )Cos ta l l oc a t i oni s_ __ __ _ __ . A)t hepr oc e s soft r a c ki ngbot hdi r e c ta ndi ndi r e c tc os t sa s s oc i a t e dwi t hac os tobj e c t B)t hepr oc e s sofde t e r mi ni ngt heoppor t uni t yc os tofac os tobj e c tc hos e n C)t hea s s i gnme ntofi ndi r e c tc os t st ot hec hos e nc os tobj e c t D)ma deba s e donma t e r i ala c qui s i t i ondoc ume nt Ans we r :C Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

7 )Thede t e r mi na t i onofac os tase i t he rdi r e c tori ndi r e c tde pe ndsupont he__ _ _ __ _ _. A)ac c ount i ngs t anda r ds B)t axs ys t e mc hos e n C)i nve nt or yval ua t i on D)c os tobj e c tc hos e n Ans we r :D Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

8 )Cl a s s i f yi ngac os ta se i t he rdi r e c tori ndi r e c tde pe ndsupon_ __ _ __ _ _. A)t hebe ha vi oroft hec os ti nr e s pons et ovol umec ha nge s B)whe t he rt hec os ti se xpe ns e di nt hepe r i odi nwhi c hi ti si nc ur r e d C)whe t he rt hec os tc a nbet r a c e dt oapar t i c ul a rc os tobj e c ti nane c onomi c al l yf e a s i bl ewa y D)whe t he rac os ti sfix e dorva r i a bl e Ans we r :C Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

9 )Amanuf ac t ur i ngpl a ntpr oduc e st wopr oduc tl i ne s :gol fe qui pme nta nds oc c e re qui pme nt .Ane xa mpl e ofadi r e c tc os tf ort hegol fe qui pme ntl i nei s__ _ __ _ _ _. A)be ve r a ge spr ovi de ddai l yi nt hepl antbr e akr oom f ort hee nt i r es t a ff B)mont hl yl e a s epa yme nt sf oras pe c i a l i z e dpi e c eofe qui pme ntne e de dt oma nuf ac t ur et hegol fdr i ve r C)s a l ar i e soft hec l e r i c als t a fft ha twor ki nt hec ompanya dmi ni s t r a t i veoffic e s D)ove r he a dsi nc ur r e di npr oduc i ngbot hgol fands oc c e re qui pme nt Ans we r :B Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

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1 0 )Ama nuf ac t ur i ngpl a ntpr oduc e st wopr oduc tl i ne s :gol fe qui pme nta nds oc c e re qui pme nt .An e xa mpl eofi ndi r e c tc os tf ort hes oc c e re qui pme ntl i nei st he_ __ _ __ __ . A)ma t e r i alus e dt oma ket hes oc c e rba l l s B)l abort os ha pet hel e a t he rus e dt omaket hes oc c e rba l l C)ma t e r i a lus e dt omanuf ac t ur et hes oc c e rs t uds D)pr ope r t yt a x e spa i dont hel andandbui l di ng( pl a nt ) Ans we r :D Di ff: 2 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 1 )Whi c honeoft hef ol l owi ngi t e msi sadi r e c tc os t ? A)Cus t ome r s e r vi c ec os t sofamul t i pr oduc tfir m;Pr oduc tAi st hec os tobj e c t . B)Pr i nt i ngc os t si nc ur r e df orpa yr ol lc he c kpr oc e s s i ng;pa yr ol lc he c kpr oc e s s i ngi st hec os tobj e c t . C)Thes a l a r yofama i nt e na nc es upe r vi s ori namul t i pr oduc tmanuf ac t ur i ngpl ant ;Pr oduc tBi st hec os t obj e c t . D)Ut i l i t yc os t soft headmi ni s t r a t i veoffic e s ;t hea c c ount i ngde pa r t me nti st hec os tobj e c t . Ans we r :B Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

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1 2 )I ndi r e c tma nuf a c t ur i ngc os t s__ _ __ _ __ . A)c anbet r ac e dt ot hepr oduc tt ha tc r e a t e dt hec os t s B)c anbee a s i l yi de nt i fie dwi t ht hec os tobj e c t C)ge ne r al l yi nc l udet hec os tofma t e r i ala ndt hec os tofl a bor D)ma yi nc l udebot hvar i a bl eandfix e dc os t s Ans we r :D Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 3 )Whi c hoft hef ol l owi ngi st r ueofi ndi r e c tc os t s ? A)I ndi r e c tc os t sa r eal wa ysc ons i de r e ds unkc os t s . B)Al li ndi r e c tc os t sar ei nc l ude di nc os tofgoodss ol d. C)I ndi r e c tc os t sa l wa ysvar yi ndi r e c tpr opor t i ont ot hel e ve lofpr oduc t i on. D)I ndi r e c tc os t sc annotbet r a c e dt oapa r t i c ul a rc os tobj e c ti na ne c onomi c al l yf e a s i bl ewa y . Ans we r :D Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 4 )Whi c hoft hef ol l owi ngs t a t e me nt si st r ue ? A)Adi r e c tc os tofonec os tobj e c twi l la l wa ysbeadi r e c tc os tofanot he rc os tobj e c t . B)Be c a us eofac os t be ne fitt r ade off,s omedi r e c tc os t sma ybet r e a t e dasi ndi r e c tc os t s . C)Al lfix e dc os t sa r ei ndi r e c tc os t s . D)Al ldi r e c tc os t sa r evar i a bl ec os t s . Ans we r :B Di ff: 2 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

1 5 )Whi c hoft hef ol l owi ngs t a t e me nt si st r ueofdi r e c tc os t s ? A)Adi r e c tc os tofonec os tobj e c ti sat r ues e ns eoft hebudge t e dc os t s . B)Al lva r i a bl ec os t sa r edi r e c tc os t s . C)Adi r e c tc os tofonec os tobj e c tc anbea ni ndi r e c tc os tofanot he rc os tobj e c t . D)Al lfix e dc os t sa r edi r e c tc os t s . Ans we r :C Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 6 )Ac os tma ybedi r e c tf oronec os tobj e c ta ndi ndi r e c tf oranot he rc os tobj e c t . Ans we r :TRUE Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

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1 7 )As s i gni ngi ndi r e c tc os t si se as i e rt ha na s s i gni ngdi r e c tc os t s . Ans we r :F ALSE Expl a na t i on:Tr ac i ngdi r e c tc os t si squi t es t r a i ght f or war d,whe r e a sas s i gni ngi ndi r e c tc os t st oanumbe rof di ffe r e ntc os tobj e c t sc a nbeve r yc hal l e ngi ng . Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

1 8 )I mpr ove me nt si ni nf or ma t i onga t he r i ngt e c hnol ogi e sa r ema ki ngi tpos s i bl et ot r ac emor ec os t sa s di r e c t . Ans we r :TRUE Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

1 9 )Thes ma l l e rt hea mountofac os tt hemor el i ke l yi ti se c onomi c a l l yf e a s i bl et ot r ac ei tt oapar t i c ul a r c os tobj e c t . Ans we r :F ALSE Expl a na t i on:Thes ma l l e rt hea mountofac os tt hel e s sl i ke l yi ti se c onomi c al l yf e a s i bl et ot r a c ei tt oa pa r t i c ul arc os tobj e c t . Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

2 0 )Adi r e c tc os tofonec os tobj e c tc a nnotbeani ndi r e c tc os tofa not he rc os tobj e c t . Ans we r :F ALSE Expl a na t i on:Adi r e c tc os tofonec os tobj e c tc a nbea ni ndi r e c tc os tofa not he rc os tobj e c t .Fore xa mpl e , de pa r t me ntAmi ghtpe r f or ms omepar toft hepr oc e s s i ngofapr oduc tB.Thec os t si nc ur r e di n de pa r t me ntAwoul dbedi r e c tc os t sofc os tobj e c tde par t me ntAbutc oul dbeani ndi r e c tc os tofc os t obj e c tpr oduc tB. Di ff: 1 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

2 1 )Thec os tofna t ur a lga sus e dt ohe a tapr oduc t i onf a c i l i t yt ha tmake st hr e epr oduc t s( A, B,andC)woul d bec l as s i fie da sani ndi r e c tc os twhe nt hec os tobj e c ti soneoft hepr oduc t s( e i t he rA,B,orC) . Ans we r :TRUE Di ff: 1 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

2 2 )Thebr oade rt hec os tobj e c tde fini t i on( i . e . ,pl a ntve r s uspr oduc t ) ,t hemor ec onfide ntt hemana ge rwi l l beaboutt hea c c ur a c yoft hedi r e c tc os ta mount s . Ans we r :TRUE Di ff: 2 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

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2 3 )Al lc os t si nc ur r e dbyac ompany( s a c r i fic eofar e s our c e )a r er e c or de di nt hea c c ount i ngs ys t e m. Ans we r :F ALSE Expl a na t i on:Ac ompa nyc a ni nc urac os twi t houti tbe i ngr e c or de di nt hea c c ount i ngs ys t e m.Ex ampl e s i nc l udeoppor t uni t yc os t sa nde nvi r onme nt alc os t s . Di ff: 2 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

2 4 )Ar c ha mbe a uPr oduc t sCompanyma nuf ac t ur e soffic ef ur ni t ur e .Re c e nt l y ,t hec ompa nyde c i de dt o de ve l opaf or ma lc os tac c ount i ngs ys t e m andc l as s i f yal lc os t si nt ot hr e ec a t e gor i e s .Ca t e gor i z ee ac hoft he f ol l owi ngi t e msa sbe i ngappr opr i a t ef or( 1 )c os tt r a c i ngt ot hefini s he df ur ni t ur e ,( 2 )c os tal l oc a t i onofa n i ndi r e c tma nuf a c t ur i ngc os tt ot hefini s he df ur ni t ur e ,or( 3 )asanonma nuf ac t ur i ngi t e m.

I t e m

Cos t Tr ac i ng

Ca r pe nt e rwa ge s De pr e c i a t i on-offic ebui l di ng Gl uef oras s e mbl y La t hede pa r t me nts upe r vi s or La t hede pr e c i a t i on La t hemai nt e na nc e La t heope r a t orwa ge s Lumbe r Sa mpl e sf ort r ades hows Me t albr ac ke t sf ordr a we r s Fa c t or ywa s hr oom s uppl i e s Ans we r : I t e m

_ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ __ _ __ _ __ _ __ _ __ __ __ _ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ _ __ _ _ __ _ _ __ _ __ __ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ _ _ __ _ __ _ __ _ __ _ __ _ __ _ __ _ _ Cos t Cos t Nonma nuTr ac i ng Al l oc a t i on f a c t ur i ng

Ca r pe nt e rwa ge s De pr e c i a t i on-offic ebui l di ng Gl uef oras s e mbl y La t hede pa r t me nts upe r vi s or La t hede pr e c i a t i on La t hemai nt e na nc e La t heope r a t orwa ge s Lumbe r Sa mpl e sf ort r ades hows Me t albr ac ke t sf ordr a we r s Fa c t or ywa s hr oom s uppl i e s

Cos t Al l oc a t i on

Nonma nuf a c t ur i ng

X X X X X X X X X X X

Di ff: 2 Obj e c t i ve :2 AACSB:Appl i c a t i onofknowl e dge

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2 5 )Wha ta r et hef ac t or st ha taffe c tt hec l a s s i fic a t i onofac os tasdi r e c tori ndi r e c t ? Ans we r :Se ve r a lf a c t or sa ffe c twhe t he rac os ti sc l as s i fie dasdi r e c tori ndi r e c t : Thema t e r i a l i t yoft hec os ti nque s t i on.Thes ma l l e rt hea mountofac os t – t ha ti s ,t hemor ei mma t e r i alt he c os ti s –t hel e s sl i ke l yi ti se c onomi c al l yf e a s i bl et ot r ac ei tt oapa r t i c ul a rc os tobj e c t . Avai l a bl ei nf or ma t i onga t her i ngt e c hnol ogy.I mpr ove me nt si ni nf or ma t i onga t he r i ngt e c hnol ogymake i tpos s i bl et oc ons i de rmor eandmor ec os t sa sdi r e c tc os t s . Des i gnofope r a t i ons .Cl a s s i f yi ngac os ta sdi r e c ti se a s i e ri fac ompa ny' sf ac i l i t y( ors omepar tofi t )i s us e de x c l us i ve l yf oras pe c i ficc os tobj e c t ,s uc hasas pe c i ficpr oduc torapa r t i c ul arc us t ome r . Di ff: 3 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

2 6 )Wha ta r et hedi ffe r e nc e sbe t we e ndi r e c tc os t sa ndi ndi r e c tc os t s ?Gi vea ne x ampl eofe a c h. Ans we r :Di r e c tc os t sa r ec os t st ha tc anbet r a c e de a s i l yt ot hepr oduc tma nuf a c t ur e dort hes e r vi c e r e nde r e d.Exa mpl e sofdi r e c tc os t si nc l udedi r e c tma t e r i al sa nddi r e c tma nuf a c t ur i ngl a borus e di na pr oduc t .I ndi r e c tc os t sc annotbee a s i l yi de nt i fie dwi t hi ndi vi dua lpr oduc t sors e r vi c e sr e nde r e d,andar e us ua l l yas s i gne dus i ngal l oc a t i onf or mul a s .I napl antt ha tma nuf a c t ur e smul t i pl epr oduc t s ,e xa mpl e sof i ndi r e c tc os t si nc l udet hepl a nts upe r vi s or ' ss a l a r yandt hec os tofmac hi ne sus e dt opr oduc emor et ha n onet ypeofpr oduc t . Di ff: 2 Obj e c t i ve :2 AACSB:Anal yt i c a lt hi nki ng

2 . 3 Obj e c t i ve2 . 3 1 )Whi c hoft hef ol l owi ngi st r uei ft hevol umeofs al e si nc r e a s e s( wi t hi nar e l e va ntr a nge ) ? A)t ot a lfix e dc os ti nc r e a s e s B)t ot a lva r i a bl ec os tde c r e a s e s C)t ot a lva r i a bl ec os ti nc r e a s e s D)t ot alfix e dc os tde c r e as e s Ans we r :C Di ff: 1 Obj e c t i ve :3 AACSB:Appl i c a t i onofknowl e dge

2 )Whi c hoft hef ol l owi ngi safix e dc os twi t hr e s pe c tt ouni t spr oduc e di naf a c t or y? A)mont hl yr e ntpa yme ntf ort hebui l di ng B)e l e c t r i c i t ye xpe ns e s C)ut i l i t i e sc os toft hebui l di ng D)di r e c tma t e r i alc os t s Ans we r :A Di ff: 1 Obj e c t i ve :3 AACSB:Appl i c a t i onofknowl e dge

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3 )Cos tbe ha vi orr e f e r st o__ _ __ _ _ _. A)ho wc os t sr e a c tt oac hangei nt hel e ve lofa c t i vi t y B)whe t he rac os ti si nc ur r e di nama nuf a c t ur i ng,me r c ha ndi s i ng,ors e r vi c ec ompany C)c l a s s i f yi ngc os t sa se i t he rpe r pe t ua lorpe r i odc os t s D)whe t he rapa r t i c ul a re x pe ns ei se xpe ns e di nt hes a meort hef ol l owi ngpe r i od Ans we r :A Di ff: 1 Obj e c t i ve :3 AACSB:Anal yt i c a lt hi nki ng

4 )Whi c hoft hef ol l owi ngi st r uei ft hepr oduc t i onvol umede c r e as e s ? A)fix e dc os tpe runi ti nc r e a s e s B)a ve r a gec os tpe runi tde c r e a s e s C)va r i a bl ec os tpe runi ti nc r e as e s D)var i a bl ec os tpe runi tde c r e a s e s Ans we r :A Di ...