1)TyeDye Lights makes two products: Party and Holiday. It takes 80,900 direct labor hours to manufacture the Party Line and 93,500 direct labor hours to manufacture the Holiday Line. Overhead consists of $225,000 in the machine setup cost pool and $149,960 in the packaging cost pool. The machine setup pool has 52,000 setups for the Party product and 98,000 setups for the Holiday product. The packaging cost pool has 26,000 parts in the Party products and 39,000 parts for the Holiday product. Using the traditional cost method of direct labor hours, what is the predetermined overhead rate?

a)$1.50 per direct labor hour

b)$3.80 per direct labor hour

c)$2.30 per direct labor hour

d)$2.15 per direct labor hour

2)Overhead costs are assigned to each product based on __________________________

a)machine hours per product

b)price of the product

c)the proportion of that product's use of the cost driver

d)a predetermined overhead rate for a single cost driver

3)Which is the correct formula for computing the overhead rate?

a)estimated overhead of the product/estimated use of the cost driver for the activity

b)estimated overhead for the activity/estimated use of the cost driver for the activity

c)estimated use of the cost driver for production/estimated overhead for the activity

d)estimated use of the cost driver for production/estimated overhead for the activity

4)A company calculated the predetermined overhead based on an estimated overhead of $70,000, and the activity for the cost driver was estimated as 2,500 hours. If Product A utilized 1,350 hours and Product B utilized 1,100 hours, what was the amount of overhead assigned to the products?

a)$30,800

b)35,000

c)$37,800

d)68,600

5)What is the proper order of tasks in an ABC system?

a)identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products

b)identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools

c)assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools

d)identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products

6)Which statement is correct?

a)Activity-based cost systems are more accurate than traditional cost systems

b)activity-based cost systems are less costly than traditional cost systems

c)activity-based cost systems are easier to implement than traditional cost systems

d)activity-based cost systems provide the same data as traditional cost systems

7)Activity-based costing is preferable in a system:

a)with a large direct labor cost as a percentage of the total product cost

b)where management needs to support an increase in sale price

c)when multiple products have similar product volumes and costs

d)with multiple, diverse products

8)Under variable costing, a unit of product includes which costs?

a)direct material, direct labor, and fixed manufacturing overhead

b)direct material, direct labor, and manufacturing overhead

c)direct material, direct labor, and all variable manufacturing overhead

d)direct material, direct labor, and variable manufacturing overhead

9)A downside to absorption costing is:

a)not including fixed manufacturing overhead in the cost of the product

b)that it is not allowable under GAAP

c)that it is not useful for management decisions

d)that it is not well designed for cost-volume-profit analysis

10)Production costs under variable costing are typically:

a)the same as with absorption costing

b)lower than under absorption costing

c)higher than absorption costing when inventory increases

d)higher than under absoption costing