1. Which of the following is not true with respect to activity-based costing (ABC)?

a)	A company should consider refining their cost system when evidence suggests that their existing system is flawed.

b)	A major disadvantage is high time and cost associated with the estimation of a cost model.

c)	ABC can be useful when products that a company is well-suited to make show small profits whereas products that a company is less suited to make show large profits.

d)	As a superior costing system, using ABC guarantees more accurate costs.

2. Which of the following is not true with respect to a traditional overhead allocation approach?

a)	The overcosted product absorbs too much cost, making it seem less profitable than it really is.

b)	Broad averages were used to allocate overhead uniformly regardless of how they are actually incurred.

c)	Historically, firms produced a limited variety of goods and their indirect costs were large.

d)	Products using fewer resources are overcosted, and products using more resources are undercosted.

3. Which of the following is not correct with respect to transferred-in (TI) costs?

a)	TI costs are treated as if they are a separate type of conversion costs added in the process.

b)	TI costs are carried forward as the product's cost when it moves to a subsequent process in the production cycle.

c)	Journal entries are made to mirror the progress in production from department to department.

d)	They are called previous department costs.