1. 2.1 Identify the three primary classifications of businesses and explain the differences among the three.
2. 2.1 Explain how the income statement of a manufacturing company differs from the income statement
of a merchandising company.
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3. 2.1 Walsh & Coggins, a professional accounting firm, collects cost information about the services they
provide to their clients. Describe the types of cost data they would collect and explain the importance of
analyzing this cost data.
4. 2.1 Lizzy’s is a retail clothing store, specializing in formal wear for weddings. They purchase their clothing
for resale from specialty distributors and manufacturers. Recently the owners of Lizzy’s have noted an
increased interest in costume jewelry and fashion accessories among their clientele. If the owners of Lizzy’s
decide to expand their business to include these products, what cost data would they need to collect and
analyze prior to expanding the business?
5. 2.2 Identify and describe the three types of product costs in a manufacturing firm.
6. 2.2 Explain the difference between a period cost and a product cost.
7. 2.2 Explain the concept of relevant range and how it affects total fixed costs.
8. 2.2 Explain the differences among fixed costs, variable costs, and mixed costs.
9. 2.2 Explain the difference between prime costs and conversion costs.
10. 2.3 Explain how a scatter graph is used to identify and measure cost behavior.
11. 2.3 Explain the components of the total cost equation and describe how each of the components can be
used by management for decision-making.
12. 2.3 Explain how the high-low method is used for cost estimation. What, if any, are the limitations of this
approach to cost estimation?