6) How does direct cost tracing improve cost accuracy? A) It identifies the cause-and-effect relationship between direct costs and indirect costs. B) It identifies the cause-and-effect relationship between activities and non-activities. C) It reclassifies costs or costs pools that vary with the quantity of a single activity cost driver as direct. D) It makes no assumptions about the cause-and-effect relationship between direct costs and activities. E) Because with a greater number of cost pools, it does not have to be concerned with the overhead costs used by different products. 7) In an activity-cost pool A) a measure of the activity performed serves as the cost allocation base. B) the costs have a cause-and-effect relationship with the cost-allocation base for that activity. C) the cost pools are homogeneous over time. D) costs in a cost pool can always be traced directly to products. E) each pool pertains to a narrow and focused set of costs. 8) A well designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis A) can be used to improve the efficiency of activities. B) is easy to analyze and interpret. C) takes the choices and judgement challenges away from managers. D) emphasizes how managers can achieve higher sales. E) helps identify trends in the market place. 10) The objective of activity-based budgeting is A) to allow multiple activities to be used as cost drivers rather than just one item such as direct labour hours. B) to compute the cost of performing activities. C) to refine the budgeting process by assigning indirect costs into activity cost pools. D) to classify costs by functional area and assign them to related activities. E) to classify costs as to whether they are value added or non-value added. 12) Which of the following statements about benchmarks is TRUE? A) They may be financial or nonfinancial. B) They are used to compute variances. C) Broad benchmarks have more relevance. D) Obtaining benchmarks has no legal or ethical issues. E) Benchmarks are the main driver of strategic planning.