11.Select the
incorrect
statement from the following.
A. If overhead costs are allocated on the basis of activities, the amount of overhead allocated to a particular product can be reduced by increasing the number of activities required by the product, thereby spreading the overhead costs over more units.
B. Activity costs are considered relevant for decision making because the cost of an activity will be avoided if the activity is eliminated.
C. In highly automated environments where companies produce many different products with varying levels of production, activity-based cost drivers are superior to volume-based drivers.
D. Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products.
12.Which of the following is an activity-based cost driver?
A. Number of machine setups
B. Material cost
C. Machine hours
D. All of these answers are correct.
13.Which of the following is a volume-based cost driver?
A. Machine hours
B. Material cost
C. Direct labor hours
D. All of these answers are correct.
14.Select the correct statement regarding activity-based costing (ABC).
A. ABC does not use cost drivers.
B. ABC uses a single activity center but multiple cost drivers.
C. ABC uses multiple activity cost centers and multiple cost drivers.
D. ABC uses multiple activity cost centers but a single cost driver.
15.A modern cost allocation process that employs multiple cost drivers is:
A. activity-based costing.
B. contribution costing.
C. process costing.
D. job order costing.
16.Actions or units of work undertaken by an organization to accomplish its mission are referred to as:
A. costs.
B. work in process.
C. activities.
D. cost objects.
17.The number of activity cost centers used by a company should:
A. equal the number of activities required to produce the product.
B. equal the number of departments it has.
C. equal the number of products it has.
D. be determined on a cost-benefit basis.
18.Which of the following is
not
a cost resulting from a unit-level activity?
A. The cost of electricity to power manufacturing equipment
B. The cost of sending monthly statements to customers
C. The indirect cost of glue used on each product
D. The per unit cost of packaging goods
19.Which of the following activity costs would
not
likely be included in a unit-level activity cost pool?
A. Indirect material
B. Packaging costs
C. Machine setup costs
D. Machine-related utilities
20.All of the following are hierarchical categories in which a firm's overhead support costs can be classified
except:
A. product-level activities.
B. industry-level activities.
C. batch-level activities.
D. facility-level activities.