1. Over-applied overhead that is material in amount is allocated between Finished Goods inventory, Work in process Inventory and Cost of Goods sold at year end. Over-applied factory overhead that is immaterial in amount is closed to Cost of Goods Sold at year end.

1. First and second sentence are true
2. First and second sentence are false
3. Only the first statement is true
4. Only the second statement is true

1. Manufacturing overhead is a

An indirect cost of jobs A necessary element of production

1. No Yes
2. No No
3. Yes Yes
4. Yes No

1. Prime cost and conversion cost share what common element of total cost?

1. Variable overhead
2. Fixed overhead
3. Direct materials
4. Direct labor

1. Variable cost

1. Increases on a per unit basis as the number of units produced increases
2. Is constant if expressed in a per unit basis
3. Remains the same in total as production increases
4. Is not affected by changes in activity from period to period