1.

Which of the following is not true of activity-based costing (ABC)?

		If overhead costs are of a big amount, ABC can provide benefits in computing accurate product costs.
		ABC is beneficial, if the costs of many activities are directly related to production units.
		For direct manufacturing costs, there is no difference between traditional costing and ABC.
		Unlike traditional costing, ABC uses multiple bases in applying overhead.
		If a company makes a single product, ABC is no better than traditional costing.

Jung Company uses activity-based costing. It makes two products, X and Y.

The company's overhead costs are traced to two activity cost pools. The following data are given:

Activity cost pool	Activity measure	Estimated Overhead Cost	Activity
			For X	For Y	Total
Design	Number of parts	$32,000	200 parts	800 parts	1,000 parts
Inspection	Production units	$18,000	2,000 units	1,000 units	3,000 units

For the design activity, its activity rate (predetermined overhead rate) is:

		$18.18 per part for X; $27.78 per part for Y
		$12.50 per part
		$32 per part for X; $6 per part for Y
		$160 per part for X; $40 per part for Y
		$32 per part