Question

1) Which of the following would not be directly related to a volume-based allocation measure?

A) The number of customers served.

B) The number of activities.

C) The number of units produced.

D) Direct materials cost.

2) Which of the following best defines a facility-level activity?

A) An activity that is performed for a group of units all at once

B) An activity that is performed for each individual unit

C) An activity that is performed to support a specific product line

D) An activity that is performed to support the entire company

3) Which of the following is the best example of a facility-level activity?

A) Human resources

B) Research and development

C) Product testing

D) Painting a final product

4) The activity-rate method involves:

A) calculating an activity rate that is similar to the predetermined overhead rate.

B)calculating the proportion of each activity driver used by each product.

C) dividing the total activity driver by the total activity cost.

D) multiplying the total activity cost by the total activity driver.

5) Which of the following is not a type of quality cost?

A) Internal failure costs

B) Development costs

C) Appraisal or inspection costs

D) Prevention costs

Answer 1

Solution 1:

Direct materials Cost would not be directly related to a volume-based allocation measure.

Hence option "D" is correct.

Solution 2:

"An activity that is performed to support the entire company" best defines a facility-level activity.

Hence option "D" is correct.

Solution 3:

Human resources is the best example of a facility-level activity.

Hence option "A" is correct.

Solution 4:

The activity-rate method involves "calculating the proportion of each activity driver used by each product".

Hence option "B" is correct.

Solution 5:

Development costs is not a type of quality cost.

Hence option "B" is correct.