1. Circle the most appropriate response for each statement where the letter "F" means False and "T" means True after each statement. i. Working capital is a variable cost. TF 11. The greatest potential for cost savings occurs in the operation phase of the life cycle. T F ili. If the capacity of an operation is significantly changed (i.e, a manufact. plant), the fixed costs will change. TF iv. The initial investment cost for a project is a nonrecurring cost. TF v. Variable costs per output unit are recurring cost. IF vi. A noncash cost is a cash flow. T F vii. Goods and services have utility because they have the power to satisfy human needs and wants. TF viii. The demand for necessities is more inelastic than the demand for 'luxuries. TF 1x. Indirect costs can normally be allocated to a specific output or work activity. TF x. Present economy studies are often done when the time value of money is not a significant factor in the situation. TF Overhead costs normally include all costs that are not direct costs. T F xii. Optimal volume (demand) occurs when total costs equal total revenue. TF xiii. Standard costs per unit of output are established in advance of actual production or service delivery. TP xiv. A related sunk cost will normally affect the prospective cash flows associated with a situation. TF xv. The average unit cost function is a linear function of demand. T F (20 pts.) xi