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1. A job order costing system would probably be appropriate for a firm that produces:
B. Stained glass windows.
C. Video cassettes.
2. Suppose your accounting textbook is the cost object of concern. The paper used to print the textbook is a(n):
A. Fixed cost.
B. Labor cost.
C. Direct cost.
D. Indirect cost.
3. An example of a period cost is:
A. Salary of a production supervisor.
B. Raw materials used in production.
C. Property taxes on a factory building.
D. Advertising and promotion expenditures.
4. An example of a product cost is:
A. Advertising expense for the product.
B. A portion of the president's travel expense.
C. Interest expense on a loan to finance inventory.
D. Production line maintenance costs.
5. Costs may be allocated to a product or activity for many purposes, but care must be exercised when using allocated costs
A. Direct costs identified with the product or activity may not be accurately assigned.
B. Fixed costs will change in total if the volume of activity changes.
C. All costs may not have been allocated to the product or activity.
D. Arbitrarily allocated costs may not behave in the way assumed in the allocation method.
Answers: 1 (B), 2 (B), 3 (D), 4 (D), 5 (D)
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