1. Smaller cost distortions occur when the traditional systems' single indirect-cost rate and the activity-cost-driver rates: a) are similar in proportion to each other b) use the same cost driver units c) are more different than alike d) use the same total costs for computations

2. Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT: a) operations that remain fairly consistent b) a highly competitive environment, where cost control is critical c) accessible accounting and information systems expertise to maintain the system d) numerous products that consume different amounts of resources

3. ABC systems: a) allocate costs based on the overall level of activity b) limit cost drivers to units of output c) generally undercost complex products d) highlight the different levels of activities

4. The goal of a properly constructed ABC system is to: a) have separate allocation rates for each department b) develop the best cost system for an economically reasonable cost c) identify more indirect costs d) have the most accurate cost system

5. Product lines that produce different variations (models, styles, or colors) often require specialized manufacturing activities that translate into: a) fewer indirect costs for each product line b) decisions to drop product variations c) greater overhead costs for each product line d) a greater number of direct manufacturing labor cost allocation rates