Determining whether materials are direct or indirect

Reference no: EM13755649

Question 1.Many similarities exist when we compare service, merchandising, and manufacturing organizations. Which type of business in the healthcare industry would fit the manufacturing classification?

Manufacturing of medical equipment (No. Manufacturing of medical equipment and manufacturing of drugs would fit the manufacturing classification.)
Manufacturing of drugs (No. Manufacturing of medical equipment and manufacturing of drugs would fit the manufacturing classification)
b only (No. Manufacturing of medical equipment and manufacturing of drugs would fit the manufacturing classification.)
both a and b (Yes. Manufacturing of medical equipment and manufacturing of drugs would fit the manufacturing classification.)

Question 2.If the total fixed cost and the contribution margin per unit of product are given, explain how to compute the number of units that must be sold to break even.

The contribution margin per unit of product is divided into the total fixed cost to obtain the number of units that must be sold to break even. (Yes. The contribution margin per unit of product is divided into the total fixed cost to obtain the number of units that must be sold to break even.)
The contribution margin percentage is divided into the total fixed cost to obtain the revenue at the break-even point. (No. The contribution margin per unit of product is divided into the total fixed cost to obtain the number of units that must be sold to break even.)
The contribution margin per unit of product is multiplied by the sales volume and divided by the unit variable cost.
The contribution margin percentage is multiplied by the sales volume and divided by the unit variable cost (No. The contribution margin per unit of product is divided into the total fixed cost to obtain the number of units that must be sold to break even.)

Question 3.What are the criteria for determining whether materials are direct or indirect?

The quantities of materials are identifiable with the production of a specific product or service. (No. The quantities of materials are identifiable with the production of a specific product or service; are easily and economically traced to the product or service; and have costs that represent a significant part of the total product or service costs.)
The quantities of materials are easily and economically traced to the product or service. (No. The quantities of materials are identifiable with the production of a specific product or service; are easily and economically traced to the product or service; and have costs that represent a significant part of the total product or service costs.)
The quantities of materials have costs that represent a significant part of the total product or service costs. (No. The quantities of materials are identifiable with the production of a specific product or service; are easily and economically traced to the product or service; and have costs that represent a significant part of the total product or service costs.)
a and c only (No. The quantities of materials are identifiable with the production of a specific product or service; are easily and economically traced to the product or service; and have costs that represent a significant part of the total product or service costs.)
all of the above (Yes. The quantities of materials are identifiable with the production of a specific product or service; are easily and economically traced to the product or service; and have costs that represent a significant part of the total product or service costs.)

Reference no: EM13755649

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