Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

1) ______

A) Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs. B) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs. C) It is often overly simplistic and incorrect to assume that direct labor-hours is a companys only manufacturing overhead cost driver. D) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

2)Which of the following statements is not correct concerning multiple overhead rate systems?

2) ______

A) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate. B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. C) A company may choose to create a separate overhead rate for each of its production departments. D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

3)Direct costs:

3) ______

A) are incurred to benefit a particular accounting period. B) are incurred due to a specific decision. C) can be easily traced to a particular cost object. D) are the variable costs of producing a product.

4)Which costs will change with a decrease in activity within the relevant range?

4) ______

A) Total fixed costs and total variable cost. B) Unit fixed costs and total variable cost. C) Unit variable cost and unit fixed cost. D) Unit fixed cost and total fixed cost.

5)A cost incurred in the past that is not relevant to any current decision is classified as a(n):

5) ______

A) period cost. B) opportunity cost. C) sunk cost. D) differential cost.