True or False Questions

A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs.

If the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job would not be known until the end of the year.

In activity-based costing, all manufacturing costs must be included in product costs.

Direct costs are usually included in the costs that are allocated to activity cost pools in an activity-based costing system.

In the first-stage allocation in an activity-based costing system, all costs allocated to all cost pools are subsequently allocated to products or customers.

If the allocation base in the predetermined overhead rate does not drive overhead costs, it will provide distorted unit product costs.

The cash budget begins with the cost of materials in dollars from the direct materials budget.

In the merchandise purchases budget, the budgeted sales (in units) for a period can be determined by adding the beginning merchandise inventory (in units) to the required purchases (in units) and substracting desired ending merchandise inventory (in units).