Question 1:

Overhead costs are assigned to each product based on __________________________

Group of answer choices:

1. price of the product

2. the proportion of that product's use of the cost driver

3. a predetermined overhead rate for a single cost driver

4. machine hours per product

Question 2:

What is the proper order of tasks in an ABC system?

Group of answer choices

1. identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products

2. identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products

3. assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools

4. identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools

Question 3:

Which statement is correct?

Group of answer choices

1. activity-based cost systems are less costly than traditional cost systems

2. activity-based cost systems provide the same data as traditional cost systems

3. activity-based cost systems are easier to implement than traditional cost systems

4. Activity-based cost systems are more accurate than traditional cost systems

Question 4:

Activity-based costing is preferable in a system:

Group of answer choices:

1. with a large direct labor cost as a percentage of the total product cost

2. where management needs to support an increase in sale price

3. with multiple, diverse products

4. when multiple products have similar product volumes and costs

Question 5:

Under variable costing, a unit of product includes which costs?

Group of answer choices

1. direct material, direct labor, and fixed manufacturing overhead

2. direct material, direct labor, and all variable manufacturing overhead

3. direct material, direct labor, and variable manufacturing overhead

4. direct material, direct labor, and manufacturing overhead

Question 6:

A downside to absorption costing is:

Group of answer choices

1. that it is not well designed for cost-volume-profit analysis

2. that it is not allowable under GAAP

3. not including fixed manufacturing overhead in the cost of the product

4. that it is not really useful for management decisions

Question 7:

Production costs under variable costing are typically:

Group of answer choices

1. lower than under absorption costing

2. the same as with absorption costing

3. higher than absorption costing when inventory increases

4. higher than under absorption costing