1.The activity-based costing method uses volume-based measures to allocate overhead costs.

true or false

2.Overhead cost is often too complex to be explained by factors like direct labor hours or machine hours.

true or false

3.A disadvantage of the plantwide and departmental methods is that low-volume complex products are often undercosted, and high-volume simpler products are often overcosted.

true or false

4.When products differ in batch size and complexity, they usually consume different amounts of overhead cost.

true or false

5.Activity-based costing eliminates the need for overhead allocation rates.

true or false

6.Allocated overhead costs vary depending upon the allocation methods used.

true or false

7.Activity-based costing cannot be used for external financial reporting purposes under GAAP.

true or false

8.A company budgets costs for the next year of $500,000 for indirect labor, $50,000 for factory utilities, and $1,000,000 for the CEO's salary. The company uses machine hours as its overhead allocation base. If 25,000 machine hours are planned for this next year, then a product requiring 10 machine hours will be assigned $220 in overhead.

true or false