2. (TCO 6) A basic assumption of activity-based costing (ABC) is that:

A) all manufacturing costs vary directly with units of production.

B) inventory levels do not fluctuate. C) only costs that respond to unit-level drivers are product costs.

D) only variable costs are included in activity-cost pools

3. (TCO 2) In a traditional job order cost system, the issue of indirect materials to a production department increases

A) stores.

B) work in process.

C) factory overhead.

D) factory overhead applied 4.

(TCO 5) A cost driver is defined as:

A) the largest cost in a manufacturing process.

B) the significant factor in the development of a new product.

C) an indirect cost that cannot be traced to a particular cost objective but is essential to the business.

D) a causal factor that increases the total cost of a cost objective.

5. (TCO 8) Wood Co. has considerable excess manufacturing capacity. A special job order's cost sheet includes the following applied manufacturing overhead costs: Fixed costs: 25,000 Variable costs: 36,000 The fixed costs include a normal $4,500 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $9,250. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job?

A) $40,500

B) $45,250

C) $61,000

D) $65,750