1. Which of the following statements is true?

Select one:

Activity-based costing cannot significantly improve product cost accuracy where there is significant product diversity.

Under traditional costing, product cost distortions will be highly significant if overhead costs are a small proportion of product cost.

Activity-based costing can significantly improve product cost accuracy where overhead costs are a large proportion of total costs.

In recent decades Direct Labour has increased as a proportion of total manufacturing costs in many manufacturing businesses.

2. In which system do materials, labor and overhead costs are traced directly to processing departments rather than individual products or jobs?

Select one:

An activity based costing system

A job order costing system

A variable costing system

A process costing system

3. Which of the following represents an incorrect sequence in preparing a departmental production report?

Select one:

Analysis of total costs, calculation of equivalent units, computation of unit costs and analysis of physical flow of units.

Analysis of total costs, analysis of physical flow of units, computation of unit costs and calculation of equivalent units

Analysis of physical flow of units, computation of unit costs, calculation of equivalent units and analysis of total costs.

All of the options are incorrect

4. The job costing system works better for:

Select one:

Different products being manufactured in industries

Identical products being manufactured on a continuous basis

Large scale production of identical products

All of the above

5. ABC Ltd makes widgets. It has no opening inventory and the closing inventory is 500 units. The budgeted and actual fixed manufacturing costs are $1,000 and the budgeted and actual production is 2,500 units.

The variable manufacturing cost was $2 per unit and the selling price was $8 per unit. Sales commissions of 4.5% of sales revenue are paid to sales people.

Other non-manufacturing fixed costs total $500.

What is the difference in profit between variable and absorption costing?

Select one:

$200

$250

$1,000

$750

6. Manufacturing overhead costs are also known as:

Select one:

Selling expenses

Direct costs

Operating expenses

Indirect product costs