1. (TCO 1) Production-cost cross-subsidization results from (Points : 3) allocating indirect costs to multiple products. assigning traced costs to each product. assigning costs to different products using varied costing systems within the same organization. assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products. 2. (TCO 1) The allocation of indirect costs in an activity-based costing system (Points : 3) may require other costs to be allocated to activities before the costs of the activities can be allocated to the products. is simplified because more costs are identified as direct costs. requires the use of heterogeneous cost pools. is simplified because a limited number of activities are identified as cost objects. 3. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management? (Points : 3) Pricing and product-mix decisions Cost reduction decisions Design decisions Discretionary decisions 4. (TCO 1) Undercosting a particular product may result in (Points : 3) loss of market share. lower profits. operating inefficiencies. understating total product costs. 5. (TCO 1) The MOST likely example of a batch-level cost is (Points : 3) utility costs. machine repairs. product-designing costs. setup costs. 6. (TCO 1) Which method of allocation probably best estimates actual overhead costs used? Why? (Points : 3) Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs. Single direct labor-hours cost driver because it is easiest to analyze and interpret. Three activity-cost drivers because they best reflect the relative consumption of resources. Three activity-cost drivers because product costs can be significantly cross-subsidized. 7. (TCO 1) A PRIMARY reason for assigning selling and distribution costs to products for analytical purposes is (Points : 3) to justify a product mix. that controllers are required to assign all costs when valuing inventories. that different processes, products, and customers require different quantities of selling and distribution activities. that all indirect costs must be assigned. 8. (TCO 1) The UNIQUE feature of an ABC system is the emphasis on (Points : 3) costing individual jobs. department indirect-cost rates. multiple-cost pools. individual activities. 9. (TCO 1) Products make diverse demands on resources because of differences in all of the following EXCEPT (Points : 3) volume. selling price. batch size. complexity. 10. (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity? (Points : 3) $3.00 $2.50 $2.00 $3.50