51. An activity-based costing system would probably not be appropriate if:
A. A company produces more than one product line.
B. A company produces only one product.
C. A company is highly automated.
D. A company has more than one production facility.
52. Overhead costs are assigned to production using an overhead application rate, whereas no such "application rate" is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that:
A. Overhead is an indirect cost which cannot be traced easily and directly to specific units of product.
B. Overhead is always larger in dollar amount than either direct materials or direct labor.
C. The amounts of direct material and direct labor applicable to each unit of production cannot be determined as easily as the amount of overhead.
D. Overhead is always equal to a constant percentage of direct labor costs.
53. An activity base is said to be a "driver" of overhead costs when the activity base:
A. Is independent of the amount of overhead cost incurred.
B. Results in an overhead application rate greater than 100%.
C. Is a causal factor in the amount of overhead cost incurred.
D. Is the largest of the various types of expenditures classified as manufacturing overhead.
54. Which of the following would likely be the most appropriate cost driver to allocate machinery set-up costs to products?
A. Machine hours.
B. Direct labor hours.
C. Number of production runs.
D. Repair work orders.
55. Using machine hours to assign manufacturing overhead to a labor intensive product line is likely to:
A. Over-apply overhead to the product line.
B. Under-apply overhead to the product line.
C. Understate direct labor costs.
D. Overstate direct labor costs.
56. If manufacturing overhead is materially over-applied, it is best to close it to:
A. Work-in-process inventory.
B. Finished goods inventory.
C. Cost of goods sold.
D. All three in an apportioned manner.
57. The cost of salaries paid to employees who work in a factory maintaining the heating system is considered:
A. Direct labor.
B. Indirect materials.
C. Factory overhead.
D. General and administrative costs.
58. The account Work-in-Process Inventory
A. Consists of completed goods that have not yet been sold.
B. Consists of goods being manufactured that are incomplete.
C. Consists of materials to be used in the production process.
D. Consists of the cost of new materials used, labor but not overhead.
59. The account Finished Goods
A. Consists of completed goods that have not yet been sold.
B. Consists of goods being manufactured that are incomplete.
C. Consists of materials to be used in the production process.
D. Consists of the cost of new materials used, labor but not overhead.
60. A job order cost system would be suitable for which of the following:
A. A manufacturer of laundry detergent.
B. A manufacturer of candy bars.
C. A sugar refinery.
D. A sailboat builder.