41. The advantage of using a predetermined overhead application rate is that:
A. Units produced are charged with a "normal" amount of manufacturing overhead regardless of whether they are produced in a high-volume month or a low-volume month.
B. Overhead costs will be limited to the predetermined amount.
C. Entries need not be made to record actual overhead costs incurred.
D. The unit cost of production will be lower than it would be if actual overhead costs were assigned to units produced.
42. A predetermined overhead application rate:
A. Is used in a job order cost system but cannot be used in a process cost system.
B. Can be determined by dividing budgeted direct labor cost by the budgeted factory overhead costs.
C. Is not generally accepted for financial reporting purposes.
D. Tends to avoid wide variations in per-unit overhead costs because of short-run changes in volume.
43. Under-applied overhead at the end of a month:
A. Results when actual overhead costs are less than amounts applied to work in process.
B. Indicates a poorly designed cost accounting system.
C. Is represented by a debit balance remaining in the Manufacturing Overhead account.
D. Is represented by a credit balance remaining in the Manufacturing Overhead account.
44. Which of the following statements is true about activity-based costing?
A. Only one activity should be used for a company.
B. Many different activity bases are used in applying overhead.
C. There can only be one cost driver.
D. Direct materials and direct labor are applied to work-in-process based upon cost drivers.
45. Which of the following is not a commonly used cost accounting system?
A. Manufacturing yield costing.
B. Job order costing.
C. Process costing.
D. Activity-based costing.
46. The type of cost accounting system best suited to a particular company depends on:
A. The nature of the company's manufacturing operations.
B. The requirements set forth by the FASB.
C. Government regulations.
D. The type of cost drivers available.
47. Manufacturing overhead is:
A. A direct cost that can traced to a specific job.
B. An indirect cost that can be traced to a specific job.
C. A direct cost that cannot be traced to a specific job.
D. An indirect cost that cannot be traced to a specific job.
48. In an activity-based costing system, manufacturing overhead costs are divided into separate:
A. Cost drivers.
B. Activity cost pools.
C. Activity bases.
D. Indirect cost centers.
49. Benefits of activity-based costing include all of the following except:
A. More accurate measures of product costs.
B. More accurate evaluations of product profitability.
C. A better understanding of what "drives" manufacturing overhead costs.
D. More subjective product pricing decisions.
50. Manufacturing overhead is:
A. A product cost.
B. An indirect cost.
C. A manufacturing cost.
D. All three of the above.