Twenty-One Executives in a Large Corporation Were Randomly Selected for a Study

question 61

Multiple Choice

Twenty-one executives in a large corporation were randomly selected for a study to determine the effect of several factors on annual salary (expressed in $000's) . The factors selected were age, seniority, years of college, number of company divisions they had been exposed to and the level of their responsibility. A regression analysis was performed using a popular spreadsheet program with the following regression output: Which one of the following is the dependent variable?

• A) Age
• B) Seniority
• C) Level of responsibility
• D) Annual salary

Understand the classification and components of factory overhead costs.

Differentiate between cost concepts including product costs versus period costs, and direct versus indirect costs.

Identify the components of product costs and understand what constitutes prime costs and conversion costs.

Recognize the accounting treatment for factory overhead and product costs in manufacturing.

---

Definitions:

Denominator Volume

The activity level used to allocate fixed costs to products or services, affecting the calculation of unit costs.

Budgeted Capacity

The amount of production or activity level planned for a future period, based on budget allocations.

Practical Capacity

The maximum amount of work or output that can be realistically achieved in a specific period under normal operating conditions.

Cost Allocation

The process of assigning indirect costs to different departments, products, or projects based on relevant distribution bases.