16. The estimated overhead for the cost pool, machine set-ups, is $180,000. The machines in the pool produce three products: X (300 set-ups); Y (200 set-ups) and Z (500 set-ups). If 20,000 units of product X are produced, the amount of machine set-up costs that will be assigned to each unit of X is:

Select one:

a.$1.80

b.$2.70

c.$4.50

d.$9.00

17. Bishop Pty Ltd produces a range of products through several processes. Total overhead costs for process A are $200,000 and overhead is allocated to units of product on the basis of $5 of overhead for each hour of direct labour employed. If 4000 units of product D pass through process A, requiring 1500 direct labour hours, the overhead from process A to be applied to product D is:

Select one:

a.$7,500

b.$26,667

c.$20,000

d.$13,333

18. Which of the following statements regarding overhead costs is not true?

Select one:

a.Overhead costs are only allocated to a single cost object.

b.Overhead costs are also known as indirect costs.

c.All of the statements about overhead costs are true.

d.Overhead costs might be traceable to an individual cost object but it is not cost effective to do so.

19. In determining the cost of inventory, department M's indirect costs are allocated using machine hours as the cost driver. If department M's indirect costs total $850,000 and it expects to use 52,000 machine hours for the period, the indirect cost rate for the department is:

Select one:

a.$0.061 per machine hour.

b.None of the options are correct.

c.$16.346 per machine hour.

d.There is insufficient information to determine the indirect cost rate for the department.

20. An indirect cost is linked to a cost object by identification of an appropriate:

Select one:

a.Cost driver.

b.Activity.

c.Allocation base.

d.Resource.