1. Question : Which of the following accounts would be a period cost rather 
than a product cost?
Student Answer:
Depreciation on manufacturing machinery. 
Maintenance on factory machines. 
Production manager’s salary. 
Direct Labor. 
Freight out.
2.  Question : The primary reason for adopting total quality management 
(TQM) is to achieve (CIA adapted)
Student Answer:
reduced delivery time. 
reduced delivery charges.
greater customer satisfaction. 
greater employee participation. 
better managerial decisions.
3. Question : Differential costs are (CMA adapted)
Student Answer:
The difference in total costs that result from selecting one 
choice instead of another. 
The profit foregone by selecting one choice instead of 
another. 
A cost that continues to be incurred in the absence of 
activity. 
A cost common to all choices in questions and not clearly 
allocable to any of them.
4. Question : If the fixed costs for a product decrease and the variable costs 
(as a percentage of sales dollars) decrease, what will be the 
effect on the contribution margin ratio and the breakeven point 
respectively? The contribution margin ratio will _____ and the 
breakeven point will _____.
Student Answer:
decrease; increase 
increase; decrease 
decrease; decrease 
increase; increase
5. Question : Which field of accounting emphasizes relevancy over 
comparability?
Student Answer:
cost accounting. 
financial accounting. 
responsibility accounting. 
international accounting.
6. Question : Pete’s Pizza Place wishes to determine which of its costs will 
vary with the number of pizzas made. The Pizza Place has four 
pizza makers and ten other employees who take orders from 
customers and perform other tasks. The four pizza makers and 
the other employees are paid an hourly wage. How would one 
classify (1) the wages paid to the pizza makers and other 
employees and (2) materials (e.g., cheeses, sauce, etc.) used to 
make the pizza? The employees’ wages would be considered a 
______, while the materials to make the pizza are a ______.
Student Answer:
fixed cost; fixed cost 
fixed cost; variable cost 
variable cost; fixed cost 
variable cost; variable cost 
mixed cost; mixed cost 
7. Question : Which of the following would not cause the breakeven point to 
change?
Student Answer:
Sales price increases. 
Fixed costs decreases. 
Sales volume decreases. 
Variable costs per unit increases. 
Product mix shifts towards the cheaper products. 
8. Question : The Blue Company is currently selling its single product for $15. 
Variable costs are estimated to remain at 70% of the current 
selling price and fixed costs are estimated to be $4,800 per 
month. If Blue increases its selling price by 10%, its variable 
cost ratio will
Student Answer:
not change 
decrease 
increase 
9. Question : A company which manufactures custom-made machinery 
routinely incurs sizable telephone costs in the process of taking 
sales orders from customers. Which of the following is a proper 
classification of this cost?
Student Answer:
Product cost 
Period cost 
Conversion cost 
Prime cost 
10. Question : The development of just-in-time (JIT) methods of production 
focused on
Student Answer:
increasing sales revenue. 
reducing inventories. 
increasing customer service. 
reducing operating expenses. 
increasing product quality.