Chapter 3 Test 2

1. Which of the following cost is not directly related to production of goods?

a) Product cost
b) Period cost
c) Semi variable cost
d) Stopped cost

2. Which of the following remain un-changed in per unit?

a) Fixed cost
b) Variable cost
c) Semi variable cost
d) Production cost

3. A fixed cost will remain un-changed only for a fixed level of activity is an
example of
a) Fixed cost
b) Direct cost
c) Relevant range
d) Indirect cost

4. Which of the following is most likely to be treated as an indirect cost for

vehicles manufacturer?
a) Raw material for vehicles
b) Labour cost
c) Lubricant oil
d) None of the above

5. A product that a company makes require 5kg of material A costing $6 per kg

and 6kg of material B costing $5.60 per kg. The product requires 3 hours of
labour at a cost of $8.40 per hour. The product is sold in packs of 20 and
packaging cost is $44 for 20 units. Fixed production cost is $60000 and admin
cost is $28000. What is the prime cost of the product?
a) $91.00
b) $93.68
c) $72.00
d) $97.43

6. Indirect costs are also referred to as

a) Production overheads
b) Product cost
c) Period cost
d) None of the above

7. Which of the following would not be a prime cost?

a) Factory rent
b) Labour cost of product
c) Material input for product
d) Hire charge for specialize machine
8. Which of the following would be most likely illustrated by this diagram given
below?

a) Factory Rent
b) Material cost
c) Supervisor Salary
d) Telephone cost

9. Classification of cost by Function is used by management to—

(i) Produce the financial statement
(ii) Control cost

a) Only (i)
b) Only (ii)
c) Both (i) & (ii)
d) None of these

10. Line rental is an example of which cost in telephone bill?

a) Semi-variable cost
b) Stepped fixed cost
c) Fixed cost
d) Prime cost