Manufacturing overhead combined with direct materials is known as conversion cost.
Write “True” if the statement is true and write “False” if the statement is false.
1. Manufacturing
2. A variable cost will change in total in proportion to changes in the level of activity.
3. A fixed cost is constant per unit of product.
4. Cost accumulation, cost allocation, and cost objects are interrelated.
5. A variable cost remains constant per unit, though in total increases as activity levels increase.
6. If volume increases, both total variables and total fixed costs will increase.
7. Decrease in the level of activity will cause total variable and total fixed costs to decrease.
8. When graphed, total variable costs and total fixed costs are both assumed to be linear within
the relevant range.
9. Fixed cost is constant in total amount regardless of changes in activity level within the relevant
range.
10. Cost function is an express that mathematically links costs, their behavior, and their cost driver.
11. As volume decreases within the relevant range, variable cost per unit remains the same and
fixed cost per unit increases.
12. The relevant range of activity is the activity level at which the company makes the highest
amount profits.
13. Fixed costs per unit decline as the activity level increase within the relevant range of activity.
14. A period cost is defined as the cost incurred when asset is used up or sold for the purpose of
generating revenue.
15. Opportunity costs could be defined as the revenue lost when one alternative is not taken in
favor of another alternative.
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