QUESTION 6

1. Advanced Technology Products produces 10 different fastners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drill bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool?

   		Output-level costs
   		Batch-level costs
   		Product-sustaining costs
   		Service-sustaining costs

QUESTION 7

1. With traditional costing systems, products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.

   	a.	overcosted
   	b.	fairly costed
   	c.	undercosted
   	d.	ignored

QUESTION 8

1. Which of the following cost and cost allocation base have a strong cause and effect relationship?

   	a.	administration costs and cubic feet
   	b.	setup costs and square feet
   	c.	quality control costs and the number of inspections
   	d.	machine maintenance and setup hours

QUESTION 9

1. Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

   Number of Number of Number of

   Product Setups Components Direct Labor Hours

   Standard 18 9 275

   Deluxe 32 14 215

   Overhead costs $75,000 $87,400

   Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?

   	a.	$81,200
   	b.	$81,900
   	c.	$61,200
   	d.	$101,200

QUESTION 10

1. Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

   Number of Number of Number of

   Product Setups Components Direct Labor Hours

   Standard 11 6 295

   Deluxe 29 13 205

   Overhead costs $60,000 $58,900

   Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?

   	a.	$59,450
   	b.	$83,800
   	c.	$56,800
   	d.	$62,100