Do you think that it is costly to convert from a traditional overhead cost allocation basis to

activity-based costing such as that used by Cold Stone Creamery?

1 2

50%50%1. Yes

2. No

Is it more complex for a company such as Cold Stone Creamery to allocate its overhead costs

using activity-based costing?

1 2

50%50%1. Yes

2. No

Do you think that it makes sense for the price that is to be paid for a product to be reflective of the activities involved in making the product for the

consumer?

1 2

50%50%1. Yes

2. No

Do you think that product cost distortions that result from improper factory overhead allocations

to products occur frequently in companies?

1 2

50%50%1. Yes

2. No

Do you think that companies use the same decision criteria in selecting which method to

use for allocating factory overhead?

1 2

50%50%1. Yes

2. No

Under the single plantwide factory overhead rate method, all of the factory overhead is allocated to

all the products using only one rate.

1 2

50%50%1. True

2. False

The greatest disadvantage of the single plantwide overhead rate method is that it is complex and expensive to apply in practice.

1 2

50%50%1. True

2. False

A company will never use different allocation bases for different departments.

1 2

50%50%1. True

2. False

The single plantwide factory overhead rate distorts product cost by averaging high and

low factory overhead costs.

1 2

50%50%1. True

2. False

Differences in production department factory overhead rates will rarely lead to distorted

product costs.

1 2

50%50%1. True

2. False

Incorrect factory overhead cost allocations may result in overcosting some product costs while

undercosting other product costs.

1 2

50%50%1. True

2. False

Service companies have a need to determine the cost of services in order to make pricing,

promoting, and other decisions with regard to service offering.

1 2

50%50%1. True

2. False

Which of the following is not a factory overhead allocation approach?

1 2 3 4

25% 25%25%25%1. Single plantwide factory overhead rate method

2. Multiple plantwide factory overhead rate method

3. Multiple production department factory overhead rate method

4. Activity-based costing method

Accurate product costs support management decisions for all of the

following except

1 2 3 4

25% 25%25%25%1. determining product

mix

2. establishing product price

3. determining whether or not to emphasize a product line

4. determining market segmentation

Which of the following methods uses different rates for each production department to allocate

factory overhead to products?

1 2 3 4

25% 25%25%25%1. Single plantwide factory overhead rate method

2. Multiple plantwide factory overhead rate method

3. Multiple production department factory overhead rate method

4. Activity-based costing method

Which of the following approaches allocates overhead most accurately?

1 2 3 4

25% 25%25%25%1. Activity-based costing

(ABC)

2. Single plantwide factory overhead rate method

3. Multiple plantwide factory overhead rate method

4. Multiple production department factory overhead rate method

Under activity-based costing, activity rates are determined by

1 2 3 4

25% 25%25%25%1. dividing the total estimated

activity base by the budgeted activity cost pool

2. dividing the budgeted activity cost pool by the total estimated activity base

3. dividing the actual activity cost pool by the total estimated activity base

4. dividing the actual activity cost pool by the total actual activity base

The production factory overhead rates used in the multiple production department rate method are determined by

which of the following formulas?

1 2 3 4

25% 25%25%25%

1. Budgeted production department factory overhead divided by the actual allocation base for each department

2. Actual production department factory overhead divided by the budgeted allocation base for each department

3. Budgeted production department factory overhead divided by the budgeted allocation base for each department

4. Actual production department factory overhead divided by the actual allocation base for each department

The single plantwide factory overhead rate is calculated with which of the following equations?

1 2 3 4

25% 25%25%25%

1. Budgeted production department factory overhead divided by the budgeted allocation base for each department

2. Total budgeted factory overhead cost divided by total budgeted plantwide allocation base

3. Total actual factory overhead cost divided by total budgeted plantwide allocation base

4. Total actual factory overhead cost divided by total actual plantwide allocation base

In using the activity-based costing approach, factory overhead costs are initially

accounted for in the

1 2 3 4

25% 25%25%25%1. activity cost pools

2. production departments

3. actual product costing

4. activity cost base

Selling and administrative expenses may be allocated by accountants in preparing which

of the following reports for management?

1 2 3 4

25% 25%25%25%

1. Financial statements

2. Profitability reports

3. Cost of quality reports

4. Activity analysis reports

Which of the following are forms of segmentation?

1 2 3 4

25% 25%25%25%

1. Demographic

2. Geographic

3. Psychographic

4. All of these responses