Required: Choose the best answer for the following statements. (You must show all necessary calculations) 1. Which of the following statements about product costs is true? a. Product costs are deducted from revenue when the production process is completed. b. Product costs are deducted from revenue as expenditures are made. c. Product costs associated with unsold finished goods appear on the balance sheet as assets. d. Product costs appear on financial statements only when products are sold. 2. The costing method that treats all fixed costs as period costs is: a. Absorption costing. b. Job-order costing. c. Variable costing. d. Process costing. 3. Bendel Ine. has an operating leverage of 7.3. If the company's sales increase by 3%, its net operating income should increase by about: a. 243.3% b. 7.3% c. 21.9% d. 3.0% 4. Zanetti Corporation produces and sells a single product. Data conceming that product appear below: The break-even in monthly unit sales is closest to: a. 3,873 b. 1,740 c. 1,201 5. Contribution margin can be defined as: a. The amount of sales revenue necessary to cover variable expenses. b. Sales revenue minus fixed expenses. c. The amount of sales revenue necessary to cover fixed and variable expenses. d. Sales revenue minus variable expenses. 6. Net operating income under absorption costing may differ from net operating income determined under variable costing. How is this difference calculated? a. Change in the quantity of units in inventory times the fixed manufacturing overhead rate per unit. b. Number of units produced during the period times the fixed manufacturing overhead rate per unit. c. Change in the quantity of units in inventory times the variable manufacturing cost per unit. d. Number of units produced during the period times the variable manufacturing cost per unit. 7. A reason why absorption costing income statements are sometimes difficult for the manager to interpret is that: a. They omit variable expenses entirely in computing net operating income. b. They shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories. c. They include all fixed manufacturing overhead on the income statement each y year as a period cost. d. They ignore inventory levels in computing income charges