13. A company uses square footage of the building as a cost driver for an activity. The building is 5,000 square feet, 500 square feet is used for product A, the rest is used for product B. The cost allocated to product A under ABC is calculated as (500 sq ft/5,000 sq ft) x total cost. This is an example of the activity rate method.

1. True
2. False

14. Materials handling costs are $12,000, setup costs are $21,000. There were 288 material moves, and 15 setups. Product A required 180 material moves, and Product B used the rest of the material moves. Product A required 9 setups, Product B used the rest of the setups. If they used the activity proportion method, how would the setup costs be allocated to product A?

1. 40% x $12,000
2. 62.5% x $21,000
3. 62.5% x $12,000
4. 60% x $21,000
5. 40% x $21,000
6. 37.5% x $21,000

15. Beginning WIP inventory contained 70,000 units. All direct materials were added at the beginning of the manufacturing process. They completed 130,000 units during the period, and there were 32,000 units in WIP inventory at the end of the period which were 80% complete. How many equivalent units were in ending WIP with respect to conversion cost?

1. 92,000
2. 25,600
3. 155,600
4. 85,600
5. 28,000