Question 1: All of the following are true statements about activitybased costing except:

a. Activitybased costing is only used for manufacturing products.

b. Activitybased costing discourages the allocation of common fixed costs that are not consumed by any customer or product line.

c. Activitybased costing helps prevent crosssubsidization errors.

Question 2: West Manufacturing uses machine-hours as the only overhead cost-allocation base. The direct cost rate is $3.00 per unit. The selling price of the product is $20.00. The estimated manufacturing overhead costs are $280,000 and estimated 40,000 machine hours. The actual manufacturing overhead costs are $300,000 and actual machine hours are 50,000. Using job order costing, the Predetermined Factory overhead rate is ?

a. $6.00 per machine hour

b. $6.50 per machine hour

c. $7.00 per machine hour

d. $5.80 per machine hour

d. Activitybased costing breaks down fixed overhead costs into cost pools that relate to product or customer lines using activities other than volume of units.

Question 3: Cool Computers (CC) had the following operational goals and actual results for this year.

	Goal	Actual
Revenue	$500,000	$490,000
Manufacturing Costs	$350,000	$320,000
NonManufacturing Costs	$100,000	$120,000
Profit	$50,000	$50,000

Which of the following correctly describes CC's performance in relation to its operational goals?

a. CC met or exceeded the following operational goals: Manufacturing Costs.

b. CC met or exceeded the following operational goals: Revenue and NonManufacturing Costs.

c. CC met or exceeded the following operational goals: Revenue, Manufacturing Costs, NonManufacturing Costs, and Profit.

d. CC met or exceeded the following operational goals: Manufacturing Costs and Profit.