6

A key aspect to the multiple production department rate method for overhead application is

a.choosing an appropriate cost driver for each product manufactured

b.choosing an appropriate cost driver for each production department

c.determining the amount of support activity used by the entire production facility

d.choosing an appropriate number of support departments to include in overhead

7

Which of the following statements is true about joint manufacturing processes?

a.Product costs are more accurate if joint costs are not allocated to individual products.

b.Joint manufacturing processes are rare.

c.Companies producing joint products rarely allocate joint costs to individual products.

d.Joint costs are by definition inseparable.

8

Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?

a.Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in the product costing system.

b.Product costs may be inaccurate because incorrect cost drivers are used.

c.Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a general and administrative expense on the income statement.

d.Product costs may be inaccurate because support department services may be used more heavily by some products than others.

9

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9. Calculator

   Carolina, the accountant for Duke Manufacturing, tells her friend, Jacob, who works in customer service for Duke, that she is writing journal entries to transfer costs to products. Carolina is referring to the

   a.cost distribution process

   b.cost assignment process

   c.cost allocation process

   d.cost application process