Questions:

1. What do we mean by cost behavior? 2. When activity increases, does the unit variable cost increase, decrease or remain the same? 3. When activity decreases, does the unit fixed cost increase, decrease or remain the same? 4. When activity decreases, does total variable cost increase, decrease or remain the same? 5. When activity increases, does total fixed cost increase, decrease or remain the same? 6. Define the following: a. Gross margin b. Contribution margin 7. What are the three elements of manufacturing costs? (Be able to determine a unit product cost and a predetermined overhead rate.) 8. Which costs are considered prime costs? Conversion costs? 9. Whats the difference between an inventoriable (product) cost and a period cost, in general? What type of costs are period costs under absorption costing? What types are product costs? 10. T/F - Under standard costing, RM, WIP and FG will always contain actual quantities but will rarely contain actual costs.