Question

True or False

1. A fixed cost is not constant per unit of product.

2. cost behavior is considered curvillinear whenever a straight line is a reasonable approximation for the relation between cost and activity.

3. The sum of all manufacturing cost except for direct materials and direct labor is called manufacturing overhead.

4. A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.

5. The relevant range concept is applicable to mixed cost.

6. One of the weaknesses of budgets is that they are of little value in covering potential bottlenecks.

7. The basic idea underlying responsibility accounting is that a manager should be held responsible for those items and only those items, that the manager can actually control to a significant extent.

8. The budgeted income statement is typically prepared before the budgeted balance sheet.

9. A manufacturing cycle efficiency ratio of less than 1.00 is desirable because this is the ratio of non-value added time to throughput time.

10. A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction.

11. if the balanced scorecard is correctly constructed the performance measures should be independent of each other so that the bad performance on one measure will not result in bad performance on another performance measure.

12. A change in sales has no effect on margin and turnover.

13. A manufacturing cycle efficiency of less than one is impossible.

Answer 1

1) True

A fixed cost is not constant per unit of product.Fixed Cost per unit decreases when the production level increases and vice verse.

2) True

Cost behavior is considered curvillinear whenever a straight line is a reasonable approximation for the relation between cost and activity.

3)True

Manufacturing OH cannot be traced to a specific product

4)True

A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.

5)False

The relevant range concept is not applicable to mixed cost

6)True

7)True

8)True

9)False

10)True

11)False

12)False

13)False