16) The cost of depreciation, insurance, and property tax on the entire production plant would be considered a unit-level cost.
17) What is the first step in developing an ABC system?
18) In using an ABC system, which of the following steps is NOT performed before the company's year begins?
A) Identify the primary activities and estimate a total cost pool for each.
B) Allocate the costs to the cost object using the activity cost allocation rates.
C) Select an allocation base for each activity.
D) Calculate an activity cost allocation rate for each activity.
19) Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below:
a. Identify the primary activities and estimate a total cost pool for each.
b. Allocate the costs to the cost object using the activity cost allocation rates.
c. Select an allocation base for each activity.
d. Calculate an activity cost allocation rate for each activity.
A) a, c, d, b
B) c, a, b, d
C) b, a, c, d
D) a, d, c, b
20) The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?
A) plant-wide overhead rate
B) Departmental overhead allocation rates
C) Activity-based costing
D) Traditional costing system
21) Which of the following does ABC take into account?
A) The types of manufacturing activities used by the product
B) The extent to which the manufacturing activities are used by the product
C) Both A and B
D) Neither A nor B
22) Machine set-up would most likely be classified as a:
A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
23) Research and development would most likely be classified as a:
A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
24) Using factory utilities would most likely be classified as a:
A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
25) Molding and sanding each unit of product would most likely be classified as a
A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.