1. Three friends decided to purchase a plane together. In doing so, they agree to equally share the costs of storing the plane at the airport. This cost sharing plan is an example of: a. Refined costing b. Activity-based costing c. Just-in-time processing d. Traditional costing

2. Activity-based costing helps to: a. Develop departmental overhead rates b. Reduce cost distortion c. Develop a plantwide overhead rate d. Allocate direct costs

3. The costs to research, develop, design and market new product model is an example of which type of activity? a. Product-level b. Facility-level c. Unit-level d. Batch-level

4. An example of a batch-level activity is a. Inspecting each unit b. Cost of research c. Machine set-up d. Design of a product

5. Which of the following would use process costing? a. Custom home builder b. Law office c. Wedding planner d. Bottled catsup manufacturer

6. The activity cost allocation rate is computed by dividing total estimated activity cost pool by total estimated activity allocation base. True or False

7. Equivalent units are not necessary when preparing a production cost report. True or False