1. Which of the following statements about product diversity is true? a. Product diversity causes product cost...
Question:
1. Which of the following statements about product diversity is true?
a. Product diversity causes product cost distortion only when the non-unit overhead costs are insignificant.
b. Product diversity results in lesser overhead activities at the unit level in the production process.
c. Product diversity is caused by differences in product size, product complexity, setup time, and size of batches.
d. Product diversity is one of the reasons for a firm to choose the plantwide costing method over other costing methods.
2. Why are predetermined overhead rates used at the beginning of the year?
a. Predetermined rates are used because it is impossible to perfectly estimate future overhead costs and production activity.
b. Predetermined rates are used because the quantity of unit-based overhead that each product consumes does not vary in direct proportion to the quantity consumed of non-unit-based overhead.
c. Predetermined rates are used because the costs of overhead and of production are often not incurred consistently throughout the year, and it is impossible to wait until the end of the year to make these calculations.
d. Predetermined rates are used because the calculation uses causal factors and it tends to be relatively more accurate than those that use only unit-level drivers.
3. Which of the following statements about the consumption ratio is true?
a. It is the proportion of a product consumed by each activity in the production process.
b. It is the proportion of an overhead activity consumed by individual products.
c. It is a measure of overhead variance when overhead costs are an insignificant percentage of total manufacturing costs.
d. It measures the demands placed on unit-level activities by a product.
4. The length of time between the beginning and completion of a process is known as the
a. activity time.
b. cycle time.
c. applied overhead.
d. expected global consumption ratio.
Expert Answer:
1c Product diversity is caused by differences in product size product complexity setup time and size ... View the full answer
