Question

1. An important difference between activity-based costing and traditional costing is that under activity-based costing, _____.

a.activities are not considered in determining product cost

b.a plantwide overhead rate is used

c.multiple overhead rates are calculated

d.unit costs are less accurate

2.

Activity-based customer costing:

a.has a single driver for all customers.

b.is not useful for companies with a JIT (just-in-time) structure.

c.is not useful for companies with only one product.

d.has customers as cost objects.

3.

Which of the following cost reduction techniques focuses on nonvalue-added activities as a measure to reduce costs?

a.Activity elimination

b.Activity reduction

c.Activity selection

d.Activity sharing

4.

Unit-level costs:

a.vary with the types of plant facilities.

b.vary with the number of product lines.

c.vary with the output volume.

d.vary with the number of batches produced.

5.

Carr Manufacturing makes a product that incurs prime costs of $310,000. Production uses 1,100 setup hours and 1,900 machine hours. Activity rates are $70 per setup hour and $40 per machine hour. Carr's total product cost is:

a.$153,000.

b.$76,000.

c.$463,000.

d.$310,000.

Answer 1

Ans-1( multiple overhead rates are calculated
Ans-2) Is not useful for companies with only one product
Ans-3) Activity elimination
Ans-4) vary with the output volume
Ans-5) $463000
Particulars	Amount in $
Prime cost	310000
setup cost(1100*70)	77000
Machine cost (1900*40)	76000
Total	463000