Question :
31. Which of the following statements true regarding a cost driver? A. Once : 1295581
31. Which of the following statements is true regarding a cost driver? A. Once a particular cost driver has been used for an activity, it may not be used again.B. Employees should never be made aware of the cost drivers for their department.C. There may be more than one potential cost driver for a particular activity.D. Choosing the wrong cost driver should not impact the determination of a product’s cost.
32. Which of the following statements is false regarding cost drivers? A. A particular cost driver may be used for more than one activity.B. If employees know the cost driver(s) for their department, it may motivate them to be more efficient.C. The selection of a cost driver should be based on the correlation it has with direct materials used in the production process.D. The best cost driver for a particular activity may be different from one company to the next.
33. Which of the following would be the least likely cost driver for an activity such as the usage of factory supplies? A. Machine hoursB. Number of engineering hoursC. Direct labor hoursD. Number of units produced
34. Which of the following would be the least likely cost driver for an activity such as the repair and maintenance of factory equipment? A. Machine hoursB. Direct labor hoursC. Number of units producedD. Number of new product designs
35. Which of the following would be the least likely cost driver for an activity such as product testing? A. Number of shipments receivedB. Number of testsC. Hours of testing timeD. Number of change orders
36. Which of the following statements comparing traditional and activity-based costing (ABC) systems is false? A. Traditional systems are generally less accurate than ABC systems.B. ABC and traditional systems often produce different product cost information.C. ABC systems focus on activity costing while traditional systems focus on volume costing.D. ABC systems are generally less expensive to implement than traditional systems.
37. Which of the following statements comparing traditional and activity-based costing (ABC) systems is true? A. ABC systems may make high-volume products appear unprofitable compared to traditional systems.B. Cross subsidies are less likely to appear in ABC systems than in traditional systems.C. Traditional systems generally give more accurate product cost information than ABC.D. ABC systems are less likely to use cost drivers than traditional systems.
38. Which of the following statements is true regarding cross-subsidies? A. They occur when factory workers are trained to work on many different machines.B. They occur when high-volume products are assigned more than their fair share of overhead costs.C. They occur when high-volume products have more direct material and direct labor costs than overhead costs.D. They occur when more than one cost driver can be determined for a particular overhead cost item.
39. What would one expect to occur when cross-subsidies are eliminated with the use of activity-based costing (ABC)? A. That lower-volume products pick up more of their fair share of overhead costs.B. That higher-volume products pick up more of their fair share of overhead costs.C. That lower-volume products will be determined as being unprofitable.D. That higher-volume products will be determined as being unprofitable.
40. Aunt Lucy’s Candies sells standard and premium chocolate candies through its catalog business. Many of the candies are sold in bulk to other companies. Last year, the company incurred $300,000 in overhead costs. After implementing activity-based costing (ABC), the company’s controller identified the following information:
Activity
Allocation Base
Proportion of Overhead Cost
Purchasing
Number of purchase orders
30%
Processing
Number of units
50%
Sales
Number of sales orders
20%
The number of activities for standard and premium candies are as follows:
Standard
Premium
Number of purchase orders
4,000
2,000
Number of units
200,000
100,000
Number of sales orders
3,000
1,000
Refer to the Aunt Lucy’s Candies information above. What is the overhead rate for the processing activity? A. $ .97B. $2.00C. $ .50D. $1.00
