1. Volume-based plant-wide rates produce inaccurate product cost when:
A) a large share of factory overhead cost is not volume-based.
B) firms produce a diverse mix of product.
C) different products consume different amounts of batch-level and product level costs.
D) all of the above are correct.
E) None of the answers above is correct.
2. As with any costing system, a firm should use activity-based costing (ABC) when the:
A) currently used system doesn't seem to be working.
B) benefits of such a system exceed the cost of implementation.
C) firm wants ...view middle of the document...
B) ABC linked to its competitive strategy.
C) effective training.
D) adequate resources.
E) all of the above.
6. An activity that is performed for each unit of production is a (n):
A) product-sustaining activity.
B) facility-sustaining activity.
C) unit-level activity.
D) performance-level activity.
E) batch-level activity.
7. Which one of the following is a high value-added activity?
A) setting up.
E) product assembly.
8. Which of the following activities is a facility-sustaining activity?
A) plant management.
B) production scheduling.
C) direct labor.
D) product design.
E) materials handling.
9. A company using a volume-based overhead assignment (allocation) method will tend to:
A) overstate the cost of low volume and low complex products.
B) understate the cost of low volume highly complex products.
C) understate the cost of high volume simple products.
D) understate the cost of all products.
E) either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved.
10. Using a plant-wide overhead rate based on machine hours to assign manufacturing overhead to a product line that uses relatively low machine hours is likely to:
A) Overapply overhead to that product line.
B) Underapply overhead to that product line.
C) Understate direct labor costs.
D) Overstate direct labor costs.
E) Either over- or under-apply overhead to the product line depending on other factors.
11. Which of the following is a benefit of activity-based costing?
A) Motivation to reduced cost drivers that cause overhead costs to be incurred.
B) lower costs to implement than traditional systems.
C) Facilitate better employee morale.
D) Fewer cost drivers than volume-based costing systems.
E) More streamlined manufacturing processes.
12. Regression analysis is better than the high low method of cost estimation because regression analysis:
A) is mathematical.
B) can provide greater precision and reliability
C) fits its data into a mathematical equation.
D) takes more time.
E) seems more precise in its execution.
13. The independent variable in regression analyses is:
A) the cost to be estimated.
B) the cost driver used to estimate the value of the dependent variable.
C) hard to define because of its independence.
D) usually expressed as a range of values.
E) not always necessary to perform regression analysis.
14. High-low and...