1. Which costs will change with a decrease in activity within the relevant range?

1. Total fixed costs and total variable cost.

2. Unit fixed costs and total variable cost.

3. Unit variable cost and unit fixed cost.

4. Unit fixed cost and total fixed cost.

2. Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

1. Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

2. Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.

3. It is often overly simplistic and incorrect to assume that direct labor-hours is a companys only manufacturing overhead cost driver.

4. The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.