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Unformatted text preview: Multiple Choice Quiz (See related pages) Your Results: The correct answer for each question is indicated by a . 1 A process that attempts to recover a fixed amount of costs with fewer and fewer units is called the: A) shadow phenomenon. B) death spiral. C) end-game. D) profit and loss syndrome. E) None of the above. Feedback: The death spiral is a process that begins by attempting to increase price to meet reported product costs. The price increase results in losing market share, reporting still higher costs, and so on until the firm is out of business 2 The Obrien Company uses machine hours to apply overhead to the Machining Department and direct labor hours in the Assembly Department. If the following information was given for 2006, determine the total amount of overhead assigned to the product: A) $860,000 B) $893,420 C) $937,540 D) $955,800 E) None of the above 1/9 Feedback: Predetermined rates: Machining, $420,000 ÷ 70,000 = $6.00 per machine hour; Assembly, $540,000 ÷ 60,000 = $9.00 per direct- labor hour. Application of overhead: Machining, 64,500 machine hours x $6 = $387,000 Assembly, 63,200 direct labor hours x $9 = 568,800 Total $955,800 3 The first step in implementing an ABC system is to: A) identify the activities. B) identify the cost drivers. C) compute a cost rate per cost driver unit or transaction. D) assign costs to products. E) none of the above. Feedback: Activity-based costing involves the following four steps: (1) Identify the activities; (2) Identify the cost drivers associated with each activity; (3) Compute a cost rate per cost driver unit or transaction; and (4) Assign cost to products. 4 The main difference between an activity-based costing system and a two- stage costing system is that, in the first-stage allocation, an activity-based costing system: A) assigns costs directly to departments. B) assigns costs directly to activities. C) uses only volume-related cost drivers to assign costs to products. D) uses a single rate to assign costs to products....
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- Spring '10