20) Which best describes the flow of overhead costs in an activity-based costing system? 21 Page A) Overhead costs - machine hours -- products B) Overhead costs activity cost pools -- cost drivers products C) Overhead costs direct labor cost or hours products D) Overhead costs - products 21) An activity that has a direct cause-effect relationship with the resources consumed is an A) cost driver B) cost pool. C) product activity. D) overhead rate. 22) Ordering materials, setting up machines, assembling products, and inspecting products are examples of A) cost drivers. B) direct labor costs. C) nonmanufacturing activities, D) overhead cost pools. 23) As compared to high-volume products, low-volume products A) require more special handling B) are frequently responsible for less overhead costs. C) require less machine setups. D) None of these answers are correct. 24) Identifying and classifying activities is the A) second step under ABC. B) last step under ABC C) first step under ABC D) None of these answers is correct 25) Which of the following is a limitation of activity-based costing? A) Some arbitrary allocations continue B) Less control over overheed costs C) More cost pools D) Poorer management decisions PROBLEMS. Write your answer in the space provided or on a separate sheet of paper. 26) Speedy Access Services Inc. leases access to high-speed computers to small businesses. It provides the following information for the year: Budgeted Actual Overhead cost $2,200,000 $2,100,000 Computer hours 100,000 90,000 Direct laber hours 200,000 180,000 Overhead is applied on the basis of computer hours. Instructions a compute the predetermined overhead rate. b. Determine the amount of overhead applied for the year