Cost allocation is the assignment of ____ costs to one or more products using a reasonable basis.

direct

indirect

a.	yes yes
b.	yes no
c.	no no
d.	no yes

____ 8. When a manufacturing company has a highly automated manufacturing plant producing many different products, which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process?

a.	direct labor hours
b.	direct labor dollars
c.	machine hours
d.	cost of materials used

____ 9. Overapplied overhead will result if

a.	the plant is operated at less than expected capacity.
b.	overhead costs incurred were greater than estimated overhead costs.
c.	overhead costs incurred were less than overhead costs charged to production.
d.	overhead costs incurred were greater than overhead charged to production.

____ 10. Pratt Tailors has gathered information on utility costs for the past year. The controller has decided that utilities are a function of the hours worked during the month. The following information is available and representative of the companys utility costs:

	Hours worked	Utility cost incurred
Low point	1,300	$ 903
High point	1,680	1,074

If 1,425 hours are worked in a month, total utility cost (rounded to the nearest dollar) using the high-low method should be

a.	$947.
b.	$954.
c.	$959.
d.	$976.

____ 11. Dynamic Corporation had the following data regarding monthly power costs:

Month	Machine hours	Power cost
Jan	300	$680
Feb	600	720
Mar	400	695
Apr	200	640

Assume that management expects 500 machine hours in May. Using the high-low method, calculate Mays power cost using machine hours as the basis for prediction.

a.	$700
b.	$705
c.	$710
d.	$1,320

____ 12. If a firm uses absorption costing, fixed manufacturing overhead will be included

a.	only on the balance sheet.
b.	only on the income statement.
c.	on both the balance sheet and income statement.
d.	on neither the balance sheet nor income statement.

Denver Corporation

The records of Denver Corporation revealed the following data for the current year.

Work in Process	$ 73,150
Finished Goods	115,000
Cost of Goods Sold	133,650
Direct Labor	111,600
Direct Material	84,200

____ 13. Refer to Denver Corporation. Assume that Denver has overapplied overhead of $25,000 and that this amount is material. What is the balance in Cost of Goods Sold after the overapplied overhead is closed?

a.	$123,267
b.	$144,033
c.	$158,650
d.	$108,650

Austin Company

The following information is available for Austin Company for its first year of operations:

Sales in units	5,000
Production in units	8,000
Manufacturing costs:
Direct labor	$3 per unit
Direct material	$5 per unit
Variable overhead	$1 per unit
Fixed overhead	$100,000
Net income (absorption method)	$30,000
Sales price per unit	$40

____ 14. Refer to Austin Company. If Austin Company had used variable costing, what amount of income before income taxes would it have reported?

a.	$30,000
b.	($7,500)
c.	$67,500
d.	cannot be determined from the information given

____ 15. A firm has fixed costs of $200,000 and variable costs per unit of $6. It plans on selling 40,000 units in the coming year. To realize a profit of $20,000, the firm must have a sales price per unit of at least

a.	$11.00.
b.	$11.50.
c.	$10.00.
d.	$10.50.