2009-01-25_013419_hlcmh_2-1 - Multiple Choice Questions 1....

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Multiple Choice Questions 1. ________ and ________ are typically the measures of volume of activity in traditional volume-based cost systems. A. Practical capacity; products sold B. Direct labor hours; practical capacity C. Direct labor hours; machine hours D. Square footage; machine hours 2. Traditional cost systems distort product costs because: A. They do not know how to identify the appropriate units B. Excess capacity costs are ignored C. They emphasize financial accounting requirements D. They use unit-level cost drivers to allocate support costs to products 3. Unit-level drives in traditional cost systems distort product costs because they: A. Assume that all support activities affect all products B. Recognize specific activities that are required to produce a product C. Do not consistently record costs D. Fail to measure the correct amount of total costs for all products 4. The use of unit-level measures to assign support costs is more likely to: A. Undercost high-volume products B. Undercost specialty low-volume products C. Undercost complex products D. Both (b) and (c) are correct 5. Misleading product cost numbers are MOST likely the result of misallocating: A. Direct material costs B. Direct manufacturing labor costs C. Support cost D. All of the above are correct 6. Undercosting a particular product may result in: A. Loss of market share for the product B. Lower profits for the product C. Operating inefficiencies D. Understating total costs of all the products CHOOSE ALL THAT APPLY 7. It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that: 1. Product costs will reflect their relative consumption of resources
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2009-01-25_013419_hlcmh_2-1 - Multiple Choice Questions 1....

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