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Chapter 04

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Chapter 04
1. Unit based costing first assigns overhead costs to departmental pools and then assigns these costs to products using predetermined overhead rates.
a. True
b. False

ANSWER: True

2. Management information systems can be divided into a unit-based type and activity-based type.
a. True
b. False

ANSWER: True

3. Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level.
a. True
b. False

ANSWER: False

4. Unit-level drivers are factors that measure the demands placed on unit-level activities by products.
a. True
b. False

ANSWER: True

5. If applied overhead is greater than actual overhead it is called overapplied overhead.
a. True
b. False

ANSWER: True

6. Unit-based product costing assigns manufacturing and selling costs to products.
a. True
b. False

ANSWER: False

7. The difference between actual overhead and applied overhead is an underapplied overhead.
a. True
b. False

ANSWER: False

8. Overhead assignments should reflect the amount of overhead demanded by each product.
a. True
b. False

ANSWER: True

9. The justification for not using a departmental rate for overhead cost assignment is that it increases accuracy.
a. True
b. False

ANSWER: False

10. Non-unit-based drivers are factors that measure the demands that cost objects place on activities.
a. True
b. False

ANSWER: True

11. If overhead is a significant proportion of the unit manufacturing costs, the distortion caused by using multi-level drivers can be serious.
a. True
b. False

ANSWER: False

12. Activity-based costing uses only unit-level drivers for costing.
a. True
b. False

ANSWER: False

13. The activity-based cost assignment is the most accurate method of costing because it follows a cause-and-effect pattern of overhead consumption.
a. True
b. False

ANSWER: True

14. An activity-based costing system traces costs to activities and then to products and other cost objects.
a.
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