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TRUE OR FALSE STATEMENTS

1. Equivalent units of production is the sum of units completed and transferred out plus equivalent units of beginning work in process.

2. When equivalent units of production are different for materials and conversion costs, unit costs are computed for materials, conversion, and total manufacturing.

3. In continuous process manufacturing, generally once the production begins, it continues until the finished product emerges.

4. When there is no beginning work in process and materials are entered at the beginning of the process, equivalent units of materials are the same as the units started into production.

5. The physical units in a department are another name for the equivalent units of production.

6. The total manufacturing cost per unit is used in costing the units completed and transferred during the period.

7. Production cost reports provide a basis for evaluating the productivity of a department.

1. Current trends in manufacturing include more direct labor and less overhead.

2. Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

3. A cost driver does not generally have a direct cause-effect relationship with the resources consumed.

4. ABC eliminates all arbitrary cost allocations.

5. ABC is particularly useful when product lines are very similar in volume and manufacturing complexity.

6. Any activity that increases the cost of producing a product is a value-added activity.

7. Non-value-added activities increase the cost of a product but not its perceived value.

8. The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

9. Traditionally, overhead is allocated based on direct labor cost or direct labor hours.

10. A high degree of correlation between the cost driver and the actual consumption of the activity cost pool is essential for accuracy.

11. Low-volume products often require more special handling than high-volume products.