Answer the following questions:

1. Which of the following costs are irrelevant for a special order that will allow an organization to utilize some of its present idle capacity?
Direct materials
Indirect materials
Variable overhead
Unavoidable fixed overhead
Differential sales commission

2. Which of the following statements is (are) false regarding cost allocations and product costing?
(A) It is easier to determine the individual product cost for a manufacturer than it is for a wholesaler.
(B) In general, indirect costs are assigned, while direct costs are allocated.
Only A is false
Only B is false.
Both A and B are false.
Neither A nor B is false.

3. The Silver Company uses a predetermined overhead rate in applying overhead to production orders on a labor cost basis in Department A and on a machine hours basis in Department B. At the beginning of 2008, the company made the following estimates:

Dept. A
Dept. B
Direct labor cost
$60,000
$40,000
Factory overhead
$90,000
$45,000
Direct labor hours
6,000
9,000
Machine hours
2,000
15,000

what predetermined overhead rate would be used in Department A and Department B respectively?

150% and300%.
150% and $3.00.
$1.50 and 300%.
$1.50 and $3.00.

4. In a labor intensive company in which more overhead is used by the more highly skilled and paid employees, which activity base would be most appropriate for applying overhead to production?
Direct labor cost.
Direct material cost.
Direct labor hours.
Machine hours.
Sales value of the product produced.

5. Which of the following statements about the theory of constraints is (are) true?
(A) The theory of constraints focuses on determining the optimal product mix when one or more resources restrict the attainment of a goal or objective.
(B) The theory of constraints focuses on maximizing the rate of throughput contribution while minimizing investment and other operating costs. (Points : 1)
only A.
only B.
neither A nor B is true.
both A and B are true.

Answer rating: 100% (QA)

1 Unavoidable fixed ov... View the full answer