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1. The primary benefit of ABC is it provides
   1. better management decisions.
   2. enhanced control over overhead costs.
   3. more cost pools.
   4. more accurate product costing.

1. Which of the following is a value-added activity?
   1. Inventory control
   2. Inspections
   3. Packaging
   4. Repair of machines

1. Which of the following is a non-value-added activity?
   1. Inventory control
   2. Machining
   3. Assembly
   4. Painting

1. Value-added activities
   1. increase the perceived worth of a product or service to customers.
   2. involve those activities that are essential to a company's operations.
   3. include engineering design, machining, and assembly.
   4. all of the above.

1. Port Accounting performs two types of services, Audit and Tax. Ports overhead costs consist of computer

support, $240,000; and legal support, $120,000. Information on the two services is:

Audit Tax

Direct labor cost $50,000 $100,000

CPU minutes 40,000 10,000

Legal hours used 200 800

Port Accounting performs tax services for Cathy Kane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Kane job using activity-based costing?

1. $2,880
2. $3,000
3. $4,080
4. $4,200

1. To use activity-based costing, it is necessary to know the
   1. cost driver for each activity cost pool.
   2. expected use of cost drivers per activity.
   3. expected use of cost drivers per product.
   4. all of the above.

1. For an activity base to be useful in cost behavior analysis,
   1. the activity should always be stated in dollars.
   2. there should be a correlation between changes in the level of activity and changes in costs.
   3. the activity should always be stated in terms of units.
   4. the activity level should be constant over a period of time.

1. Outsourcing production will
   1. reduce fixed costs and increase variable costs.
   2. reduce variable costs and increase fixed costs.
   3. have no effect on the relative proportion of fixed and variable costs.
   4. make the company more susceptible to economic swings.

1. Which cost is not charged to the product under variable costing?
   1. Direct materials
   2. Direct labor
   3. Variable manufacturing overhead
   4. Fixed manufacturing overhead

1. Sprinkle Co. sells its product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000 manufacturing overhead, and $30,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is:
   1. $8.
   2. $9.
   3. $13.
   4. $14.