12) Which of the following statements is true of costing systems? A) Activity-based costing systems tend to use fewer cost pools than does a traditional costing system B. Traditional costing systems tend to be more costly than activity-based costing systems. C) Activity-based costing systems tend to combine various costs into a single cost pool. D) Many traditional costing systems can distort product costs and profitability. 13) An activity-based costing system is developed in four steps. a. Compute the allocation rate for each activity. b. Identify activities and estimate their total costs. c. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base. d. Allocate the indirect costs to the cost object. Which of the following is the correct order of performing these steps? A) b, c, a, d B) c, a, b, d C) a, b, c, d D) b, a, c, d 14) Which of the following is the most appropriate cost driver for allocating the cost of warranty services? A) number of service calls B) number of machine hours C) number of employees D) number of materials purchased 15) Which of the following statements is true of target pricing? A) It does not consider the nonmanufacturing costs while calculating the target cost. B) It starts with the price that customers are willing to pay. C) It is the same as cost-based pricing. D) It uses the full product cost that a company estimates to arrive at the sales price. 16) Which of the following is a nonmanufacturing cost? A) direct materials C) direct labor 8) administrative expenses D) indirect labor 17) Dunby Inc., a law consulting firm, has been using a single plantwide rate with direct labor hours as the allocation base to allocate overhead costs. The direct labor rate is $250 per hour. Clients are billed at 140% of direct labor cost. Chandler Massey, the president of Dunby, decided to develop an ABC system to accurately allocate the indirect costs. He identified two activities that amount to the total Indirect costs-travel and information technology support. The other relevant details are given below: The predetermined overhead allocation rate for travel will be A) $40.74 per mile B) $250 per mile C) $75.74 per mile D) $38.00 per mile