Multiple choice questions:

1) Which of the following is used to charge the cost of direct labor to the production?

A) Debit for standard quantity for actual production times standard cost per hour

B) Credit for standard quantity usage for actual production times actual cost per hour

C) Debit for actual quantity times standard cost per hour

D) Credit for standard quantity for actual production times standard cost per hour

2) An activity-based costing system is developed in four steps.

a. Compute the allocation rate for each activity

b. Identify activities and estimate their total costs

c. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base

d. Allocate the indirect costs to the cost object

Which of the following is the correct order of performing these steps?

A) A, b, c, d

B) C, a, b, d

C) B, c, a, d

D) B, a, c, d

3) For a pharmaceutical company, the most suitable base for allocating research and development costs to the finished products would be:

A) Direct labor hours.

B) Cost of raw materials purchased.

C) Number of new patents filed.

D) Number of set ups.

4) Which of the following is the most appropriate cost driver for allocating the cost of warranty services?

A) Number of employees

B) Number of materials purchased

C) Number of machine hours

D) Number of service calls

5) Which of the following statements is correct regarding the activity-based costing system?

A) It uses separate indirect cost allocation rates for each activity.

B) It is not as accurate or precise as traditional costing systems.

C) It accumulates overhead costs by processing departments.

D) It is less complex and, therefore, less costly than traditional systems.