1. Which costing system is most likely to produce the least cost distortion? a. Departmental overhead allocation rates b. Plantwide overhead rate c. Activity-based costing d. Traditional costing system

2. The cost of reworking defective products before shipping to customers would be classified as which type of quality costs? a. External failure cost b. Internal failure cost c. Prevention cost d. Appraisal cost

3. A window manufacturer has a commitment to lean production. What is not a benefit from adopting a lean production philosophy? a. Ability to respond more quickly to changes in customer demand b. More space available for production c. Ability to continue production despite disruptions in deliveries of raw materials d. Lower inventory carrying costs

4. A computer manufacturer's spending on testing its computers before shipping them to customers helps reduce which of the following costs? a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs

5. Which of the following is not a good reason for a paint manufacturer to use activity-based costing? a. The paint manufacturer has the technology in place to capture the required information to implement activity-based costing. b. The paint industry is highly competitive. c. Most costs are direct; indirect costs are a small proportion of total costs. d. The paint manufacturer produces a variety of paint types, with some types much more difficult to produce than other types.

6. Cost distortion is likely to cause: a. Overcosting of all products. b. Undercosting of all products. c. Overcosting some products and undercosting other products. d. Accurate costing of all products.