Multiple Choice Questions:

1) Which of the following is the last step in developing an activity-based costing system?

A) Estimate the total quantity of the cost driver

B) Estimate the total indirect costs of each activity

C) Identify the activities

D) Allocate indirect costs to the cost object

2) The activity-based costing system improves the allocation of:

A) Indirect manufacturing costs.

B) Direct labor.

C) Direct materials.

D) Sales commissions.

AICPA Functional: Measurement

3) Which of the following would most likely be treated as an activity in an activity-based costing system?

A) Direct labor cost

B) Machine processing

C) Direct materials cost

D) Sales revenues

4) The product line of a manufacturing company is most likely to be considered as:

A) Cost centers.

B) Profit centers.

C) Revenue centers.

D) Investment centers.

5) Responsibility reports for a profit center include:

A) Revenues only.

B) Invested capital.

C) Both revenues and costs.

D) Returns on investments.