Assigning manufacturing overhead to a specific job involves some difficulties. Which of the following is an example of such a difficulty? Manufacturing overhead consists of many different costs ranging from selling to administrative expenses. Manufacturing overhead is a direct cost and cannot be traced to a particular product or job. Because of the fixed costs in manufacturing overhead, the average cost per unit will vary from one period to the next. Manufacturing overhead consists of only fixed costs. QUESTION 2 Why is a predetermined overhead rate calculated and used to apply manufacturing overhead to a job, instead of using the actual cost of manufacturing overhead? Predetermined overhead rates result in identical jobs being priced differently due to seasonal factors. If an actual rate is computed monthly or quarterly, seasonal factors in overhead costs or in the allocation base can produce fluctuations in the overhead rate. Using predetermined overhead rates allows management to manipulate amounts recorded to enhance income as needed Using a predetermined overhead rate is easier than using actual overhead rates QUESTION 3 All of the following statements are true except: If the base in the predetermined overhead rate does not "drive" overhead costs, product costs will be distorted. A cost driver is a factor, such as machine hours, beds occupied, computer time or flight hours that causes overhead costs. A cost driver refers to the direct materials and direct labor costs used in manufacturing environments. In the past, direct labor accounted for up to 60% of the cost of many products, however, this situation has changed due to sophisticated automated equipment and increased need for skilled indirect workers