Quiz 2

Question 1

Which of the following is an example of a variable cost?

insurance on the production equipment

direct materials

the production supervisor’s salary

depreciation of the factory building

Answer 1

direct materials

Question 2

Which of the following costs is an indirect product cost?

property taxes on plant facilities

wages of assembly workers

materials used

president’s salary

Answer 2

property taxes on plant facilities

Question 3

Which of the following costs is a variable cost?

supervisors’ salaries

research and development

materials used in production

rent

Answer 3

materials used in production

Question 4

Which item is not an example of a sunk cost?

materials needed for production

purchase cost of machinery

depreciation

All are sunk costs.

Answer 4

materials needed for production

Question 5

If total warehousing cost for the year amounts to £350 000, and 40 per cent of the warehousing activity is associated with finished goods and 60 per cent with direct materials, how much of the cost would be charged as a product cost?

Answer 5

£210 000

Question 6

Which of the following is a product cost?

advertising expenditures

insurance on the office buildings

depreciation of the salesmen’s cars

depreciation of the production facilities

Answer 6

depreciation of the production facilities