1. A unit-level driver is consumed by a product each and every time that
a. a batch of products is produced.
b. a purchase order is issued.
c. a unit is produced.
d. a customer complains.
e. none of the above.

2. Which of the following is a nonunit-level driver?
a. Direct labor hours
b. Machine hours
c. Setup hours
d. Direct materials
e. Assembly hours

3. Consider the information given on two products and their activity usage:

The consumption ratios for the setup activity for each product are
a. 0.167; 0.833.
b. 0.333; 0.667.
c. 0.500; 0.500.
d. 0.20; 0.80.
e. none of the above.

4. Refer to the data for Multiple-Choice Exercise 7-3. Suppose that machine hours are used to assign all overhead costs to the two products. Select the best answer from the following:
a. Laser printers are undercosted, and dot matrix printers are overcosted.
b. Laser printers and dot matrix printers are accurately costed.
c. Laser printers are overcosted, and dot matrix printers are undercosted.
d. Using inspection hours to assign overhead costs is the most accurate approach.
e. None of the above.

5. The first stage of ABC entails the assignment of
a. resource costs to departments.
b. activity costs to products or customers.
c. resource costs to a plantwide pool.
d. resource costs to individual activities.
e. resource costs to distribution channels.

6. The second stage of ABC entails the assignment of
a. resource costs to departments.
b. activity costs to products or customers.
c. resource costs to a plantwide pool.
d. resource costs to individual activities.
e. resource costs to distribution channels.

7. Interview questions are asked to determine
a. what activities are being performed.
b. who performs the activities.
c. the relative amount of time spent on each activity by individual workers.
d. possible activity drivers for assigning costs to products.
e. all of the above.

8. The receiving department employs one worker, who spends 75 percent of his time on the receiving activity and 25 percent of his time on inspecting products.
His salary is $40,000. The amount of cost assigned to the receiving activity is
a. $34,000.
b. $40,000.
c. $10,000.
d. $30,000.
e. none of the above.

9. Assume that the moving activity has an expected cost of $80,000. Expected direct labor hours are 20,000, and expected number of moves is 40,000. The best activity rate for moving is
a. $4 per move.
b. $1.33 per hour-move.
c. $4 per hour.
d. $2 per move.
e. none of the above.

10. Which of the following is a true statement about activity-based customer costing?
a. Customer diversity requires multiple drivers to trace costs accurately to customers.
b. Customers can consume customer-driven activities in different proportions.
c. It often produces changes in the company€™s customer mix.
d. It often improves profitability.
e. All of the above aretrue.

Transcribed Image Text:

Laser Printer Units produced Setup hours Inspection hours Machine hours 1,000 800 500 200 Dot Matrix Printer 4,000 400 500 1,000