Reference no: EM132662346

Problem 1: ABC Manufacturing Company prepays its insurance coverage for a two-year period. The premium for the two years is $2.800 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product costs and period costs respectively for the first year of coverage?

                               PRODUCT COSTS          PERIOD COSTS

Option A              $1,120                                $280

Option B                $280                          $1,120

Option C             $2,240                              $560

Option D                $560                             $2,240

Select one:

a. Option A

b. Option C

c. Option B

d. Option D

Problem 2: B company is a bike manufacturer. Which costs will change with a decrease in activity within the relevant range?

Select one:

a. Total fixed costs and total variable costs.

b. Unit fixed cost and total variable costs.

c. Unit variable cost and unit fixed cost.

d. Unit fixed cost and total fixed costs.