Problem 1: Multiple-Choice Questions (48 points) Instructions: Circle the letter of the one best answer to each question. 1. Which of the following (A-D) is not typical of traditional costing systems? A. Use of a single predetermined overhead rate B. Use of direct labor hours or direct labor cost to assign overhead C. Assumption of correlation between direct labor and incurrence of overhead cost D. Use of multiple cost drivers to allocate overhead E. All of the above are typical of traditional costing systems Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true? 2. Direct labor constitutes a significant part of total product cost. (1) (2) A high correlation exists between direct labor and changes in the amount of overhead costs. A. (1) only B. (2) only C. D. Either (1) or (2) Both (1) and (2) 3. The primary benefit of ABC is it provides A. better management decisions due to more accurate product costing B. enhanced control over overhead costs C. more cost pools smaller direct labor cost D. 4. Which of the following is a limitation of activity-based costing? A. More cost pools B. Less control over overhead costs C. Poorer management decisions D. Some arbitrary allocations continue