MAC2602 ASSIGNMENT 2 COMPLETE ANSWERS
STUDY GUIDE 2025/2026 VERIFIED SOLUTIONS AND
CORRECT ANSWERS || 100% GUARANTEED PASS
<LATEST VERSION>
Theme 1: Cost Concepts & Behaviour
1. Q: What is the primary difference between a period cost and a product cost?
A: Product costs are inventoried as part of the cost of the product and
become an expense (COGS) only when the product is sold. Period costs are
expensed in the period they are incurred.
2. Q: A cost that remains constant in total, regardless of activity level within a
relevant range, is known as what?
A: A fixed cost.
3. Q: What is the term for a cost that contains both variable and fixed cost
elements?
A: A mixed (or semi-variable) cost.
4. Q: The relevant range refers to what?
A: The range of activity within which the assumptions about fixed and
variable cost behaviour are valid.
5. Q: Direct materials and direct labour are collectively known as what?
A: Prime costs.
6. Q: Direct labour and manufacturing overhead are collectively known as
what?
, A: Conversion costs.
7. Q: Why is depreciation on a factory building a product cost, while
depreciation on the admin office building is a period cost?
A: The factory building is part of the manufacturing process, so its
depreciation is part of manufacturing overhead (a product cost). The admin
office is not involved in production, so its depreciation is an administrative
period cost.
8. Q: If the activity level increases, what happens to the variable cost per unit?
A: It remains constant.
9. Q: If the activity level decreases, what happens to the total fixed cost?
A: It remains constant (within the relevant range).
10.Q: The high-low method is used primarily for what purpose?
A: To separate a mixed cost into its fixed and variable components.
Theme 2: Job-Order Costing
11.Q: Which costing system is used when many different products or services
are produced on a per-order basis?
A: Job-order costing.
12.Q: What is the primary document used to track costs assigned to a specific
job or batch?
A: A job cost sheet.
13.Q: What is the journal entry to record the purchase of raw materials?
A: Debit Raw Materials Inventory, Credit Accounts Payable/Cash.
STUDY GUIDE 2025/2026 VERIFIED SOLUTIONS AND
CORRECT ANSWERS || 100% GUARANTEED PASS
<LATEST VERSION>
Theme 1: Cost Concepts & Behaviour
1. Q: What is the primary difference between a period cost and a product cost?
A: Product costs are inventoried as part of the cost of the product and
become an expense (COGS) only when the product is sold. Period costs are
expensed in the period they are incurred.
2. Q: A cost that remains constant in total, regardless of activity level within a
relevant range, is known as what?
A: A fixed cost.
3. Q: What is the term for a cost that contains both variable and fixed cost
elements?
A: A mixed (or semi-variable) cost.
4. Q: The relevant range refers to what?
A: The range of activity within which the assumptions about fixed and
variable cost behaviour are valid.
5. Q: Direct materials and direct labour are collectively known as what?
A: Prime costs.
6. Q: Direct labour and manufacturing overhead are collectively known as
what?
, A: Conversion costs.
7. Q: Why is depreciation on a factory building a product cost, while
depreciation on the admin office building is a period cost?
A: The factory building is part of the manufacturing process, so its
depreciation is part of manufacturing overhead (a product cost). The admin
office is not involved in production, so its depreciation is an administrative
period cost.
8. Q: If the activity level increases, what happens to the variable cost per unit?
A: It remains constant.
9. Q: If the activity level decreases, what happens to the total fixed cost?
A: It remains constant (within the relevant range).
10.Q: The high-low method is used primarily for what purpose?
A: To separate a mixed cost into its fixed and variable components.
Theme 2: Job-Order Costing
11.Q: Which costing system is used when many different products or services
are produced on a per-order basis?
A: Job-order costing.
12.Q: What is the primary document used to track costs assigned to a specific
job or batch?
A: A job cost sheet.
13.Q: What is the journal entry to record the purchase of raw materials?
A: Debit Raw Materials Inventory, Credit Accounts Payable/Cash.
