1. Consider a single hard copy of this textbook as a cost object. What would be the best two labels to classify the relation between this cost object and the following two costs of producing the cost object respectively: (1) the paper; and (2) the one-time fees paid to the authors (i.e., not royalties)?
a. (1) direct cost; (2) variable cost
b. (1) variable cost; (2) unavoidable cost
c. (1) fixed cost; (2) variable cost
d. (1) direct cost; (2) fixed cost
e. (1) avoidable cost; (2) variable cost
2. Given a cost has already been identified as a variable cost, which of the following additional descriptions of the cost is incompatible with that identification?
a. The cost, in total, does not change with changes in the volume of the cost item.
b. The cost can be traced directly to the cost object.
c. The cost, in total, does change with changes in the volume of the cost item.
d. The cost cannot be traced directly to the cost object.
e. The cost is not a prime cost.
3. The cost of producing the 100 units is perfectly variable and the cost item is the number of units produced. The cost of the direct materials traced to each unit is $1.25. Indirect costs are completely fixed at $75 for the production of the 100 units. What are the total conversion costs for the 100 units of Product X?
a. $12
b. $175
c. $200
d. $250
e. $275