QUESTION 1

Predetermined overhead rates are based on actual cost and actual activity data and not on budgeted values.

True

False

10 points

QUESTION 2

In traditional costing systems, many simple products high volume are overcosted and complex low volume products are undercosted.

True

False

10 points

QUESTION 3

Activity-based costing uses a number of activity cost pools, each of which is allocated to products based on the basis of either activities or volume based drivers.

True

False

10 points

QUESTION 4

A traditional costing system is generally easier to set up and run than an activity-based costing system.

True

False

10 points

QUESTION 5

Which statement about indirect costs is FALSE?

		Today, indirect costs exceed 50% of total costs in many companies.
		Some indirect costs are variable.
		Managers can ignore indirect costs and make good operational decisions.
		Indirect costs include labor costs that cannot be traced to a particular product.

10 points

QUESTION 6

When the actual amount of overhead exceeds the amount of overhead applied, then companies commonly close out the difference to cost of goods sold.

True

False