Statement 1: Depreciation on equipment a company uses in its selling and administrative activities would be classified as a product cost. Statement 2: A publisher that sells its books trough agents who are paid a constant percentage commission on each book sold would classify the commissions as variable cost. Statement 3: The cost of goods manufacture is calculated by adding the amount of work-in-process at the end of the year to the cost of raw materials used, direct labor worked, and manufacturing overhead incurred for the year and then subtracting work-in-process at the beginning of the year. Statement 4: Variable cost per unit is unaffected by changes in activity. Statement 5: A cost is either direct or indirect. Direct is considered as a prime cost while indirect is considered a conversion cost. a. All statements are true d. Statements 1, 4 and 5 are true b. Statements 1, 3 and 5 are true e.Statements 2, 4 and 5 are true c.Statements 1, 2 and 4 are true f. Statements 2, 3 and 4 are true
Statement 1: Depreciation on equipment a company uses in its selling and administrative activities would be classified as a product cost. Statement 2: A publisher that sells its books trough agents who are paid a constant percentage commission on each book sold would classify the commissions as variable cost. Statement 3: The cost of goods manufacture is calculated by adding the amount of work-in-process at the end of the year to the cost of raw materials used, direct labor worked, and manufacturing overhead incurred for the year and then subtracting work-in-process at the beginning of the year. Statement 4: Variable cost per unit is unaffected by changes in activity. Statement 5: A cost is either direct or indirect. Direct is considered as a prime cost while indirect is considered a conversion cost. a. All statements are true d. Statements 1, 4 and 5 are true b. Statements 1, 3 and 5 are true e.Statements 2, 4 and 5 are true c.Statements 1, 2 and 4 are true f. Statements 2, 3 and 4 are true
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Statement 1: Depreciation on equipment a company uses in its selling and administrative activities would be classified as a product cost.
Statement 2: A publisher that sells its books trough agents who are paid a constant percentage commission on each book sold would classify the commissions as variable cost.
Statement 3: The cost of goods manufacture is calculated by adding the amount of work-in-process at the end of the year to the cost of raw materials used, direct labor worked, and manufacturing overhead incurred for the year and then subtracting work-in-process at the beginning of the year.
Statement 4: Variable cost per unit is unaffected by changes in activity.
Statement 5: A cost is either direct or indirect. Direct is considered as a prime cost while indirect is considered a conversion cost.
a. All statements are true
d. Statements 1, 4 and 5 are true
b. Statements 1, 3 and 5 are true
e.Statements 2, 4 and 5 are true
c.Statements 1, 2 and 4 are true f. Statements 2, 3 and 4 are true
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