1. Mansfield Corporation estimates its manufacturing overhead costs to be $160,000 and its direct labor costs to be $320,000 for 2007. The actual manufacturing labor costs were $80,000 for job 1, $120,000 for job 2 and $160,000 for job 3 during 2007. Manufacturing overhead is applied to jobs on the basis of direct labor costs using a predetermined overhead rate. The actual manufacturing overhead cost for the year was $172,000. The amount of the manufacturing overhead variance during 2007 was: $ 8,000 Overapplied $12,000 Overapplied $12,000 Underapplied $ 8,000 Underapplied 2. Setup labor costs required for setting up equipment for flexible production facilities for manufacturing would be an example of: Unit-level activity Batch-level activity Product-level activity Customer-level activity 3. Ferguson Molding Company produces custom bottle caps and jar covers for large cosmetic companies. Each customer owns the custom-made molds that are used for the caps and jar covers, so caps are produced only to customer order. Each order requires the setting of molds in molding machines. Two full time mechanics, whose combined total annual salary and benefits are $160,000 per year, are employed setting up and breaking down the molding machines. An order consists of anywhere from 50,000 to 500,000 units. 80 orders were received during the year 2008 for individual custom production runs. The total number of units produced was 8 million. The machine operator's labor to operate the molding machine to produce a run of custom jar covers is an example of: Facility-level activity Product-level activity Batch-level activity Customer-level activity 4. Which of the following indicates that a company may benefit from an Activity-Based Costing system? Standard high-volume goods and services show significant profits Indirect costs are insignificant in proportion to direct costs The company loses relatively high priced bids Goods and services are complex and may require many different processes or inputs 5. The predetermined overhead rate for manufacturing overhead for Mansfield Corporation was $8.00 per direct labor hour. The estimated labor rate was $10.00 per hour. If the estimated direct labor cost was $150,000, what was the estimated manufacturing overhead? $ 93,750 $ 75,000 $120,000 $ 15,000 6. Which of the following statements regarding traditional cost accounting systems is False? Products are often over or under costed in traditional cost accounting systems Most traditional cost accounting systems do not trace individual costs to products The advantage of traditional cost accounting systems is their simplicity Traditional cost accounting systems can be sufficient to meet managers' cost information needs as long as the level of indirect costs is relatively high compared to the level of direct costs