1. Traditional costing methods are:

FIFO method and average price method

Absorption and variable costing method

Direct, step-down and reciprocal method

Job order costing and process costing

2. The cost to set up production equipment is best allocated directly to products via machine hours.

True

False

3. Overheads are:

Direct material and direct labor

Indirect material, depreciation of equipment used in production and direct material

Indirect material, depreciation of equipment used in production

Direct material, direct labor and administration costs

4. In ABC the assumption is that ___________ use resources or cause costs.

Activities

Products

Activities and products

None of the above

5. By process costing production temporary cost carrier is:

Each job of production process

Each phase of production process

Finished product

Unfinished product

6. If products are uniformed and customers are similar in their demands, activity-based costing may not offer a significant advantage over machine hours when assigning overhead.

True

False

7. By its traceability to products the cost are divided on:

Fixed and variable

Direct and indirect

Product costs and period costs

Expired and unexpired costs

8. Manufacturing costs are often organized in the general ledger by function and department. When applying activity-based costing, these manufacturing costs will be sorted by activities.

True

False

9. Activity-based costing will provide greater accuracy when allocating costs than a manufacturer's machine hours when its products and customers are _______________ (less/more) diverse.

Your answer

10. In order to calculate overheads allocation rate we divide a) ________________ with b) ______________.

Your answer

11. When using machine hours for allocating manufacturing overhead (instead of activity-based costing), a low-volume item requiring a significant amount of special handling will be assigned too _____________ (little/much) manufacturing overhead.

Your answer

12. What is the use of Life cycle costing?

Your answer

13. How can we connect ABC method and Target costing?

Your answer