1. Design costs are an example of: a) unit-level costs b) product-sustaining costs c) facility-sustaining costs d) batch-level costs

2. A manufacturing firm produces multiple families of products requiring various combinations of different types of parts. Of the following, the MOST appropriate cost driver for assigning materials handling costs to the various products is: a) number of parts used b) number of suppliers involved c) number of units produced d) direct labor hours

3. A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis: a) emphasizes how managers can achieve higher sales b) is easy to analyze and interpret c) takes the choices and judgment challenges away from the managers d) can be used to eliminate nonvalue-added activities

4. ABC systems: a) reveal activities that can be eliminated b) help identify new designs to reduce costs c) help control nonfinancial items such as number of setup hours d) All of these answers are correct.

5. Undercosting a particular product may result in: a) understating total product costs b) loss of market share c) operating inefficiencies d) lower profits

6. Activity-based management (ABM) includes decisions about all EXCEPT: a) reducing costs b) pricing and product mix c) improving processes d) smoothing costs