1. In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:a large proportion of non-unit-level activities.minimal product-line diversity and a small proportion of non-unit-level activities.product-line diversity.product-line diversity and a large proportion of non-unit-level activities.existing variances from budgeted amounts.2.The salaries of a manufacturing plant’s management are said to arise from:product-sustaining activities.facility-level activities.unit-level activities.batch-level activities.direct-cost activities.The following tasks are associated with an activity-based costing system:1— Assignment of cost to products2— Calculation of pool rates3— Identification of cost drivers4— Identification of cost poolsWhich of the following choices correctly expresses the proper order of the preceding tasks?4, 3, 2, 1.4, 2, 1, 3.1, 2, 3, 4.3, 4, 2, 1.2, 4, 1, 3.5. In an activity-based costing system, direct materials used would typically be classified as a:matrix-level cost.facility-level cost.product-sustaining cost.batch-level cost.unit-level cost.6.Which of the following isnota broad, cost classification category typically used in activity-based costing?Batch-level.Facility-level.Management-level.Unit-level.Product-sustaining level.7. Generally speaking, companies prefer doing business with customers who:need specialized engineering design changes.request normal delivery times.order small quantities rather than large quantities.often change their orders.require special packaging or handling.8. Magnolia Industries combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours. Activity-based costing would likely show that with Magnolia’s current procedures that:the company’s low-volume products are overcosted.the company’s high-volume products are overcosted.the company’s high-volume products are undercosted.all of the company’s products are undercosted.all of the company’s products are overcosted.9. Which of the following statements is (are) true about non-value-added activities?I. Non-value-added activities are often unnecessary and dispensable.II. Non-value-added activities may be necessary but are being performed in an inefficient and improvable manner.III. Non-value-added activities can be eliminated without deterioration of product quality, performance, or perceived value.II only.III only.I and II.I, II, and III.I only10. Consider the following statements regarding traditional costing systems:I. Overhead costs are applied to products on the basis of volume-related measures.II. All manufacturing costs are easily traceable to the goods produced.III. Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.Which of the above statements is (are) true?I only.I and III.II only.II and III.III only.11. Motor Mike builds recreational motor homes. All of the following activities add value to the finished productexcept:final painting and polishing.assembly of the frame to the chassis.installation of carpet.storage of the vehicle in the sales area.addition of exterior lights.12. Of the following organizations, activity-based costing (ABC)cannotbe used by:hotels.book publishers.financial-services firms.None of these are correct, as all these organizations can use ABC.manufacturers.13. Consumption ratios are useful in determining:overhead that is incurred at the unit level.the existence of product-line diversity.if overhead-producing activities are being utilized efficiently.if overhead costs are being applied to products.if overhead-producing activities are being utilized effectively.14. Overton Enterprises is converting to an activity-based costing system. It wishes to depict the various activities in its manufacturing process along with the activities’ relationships. Which of the following is a tool that the company can use to accomplish this task?Decision trees.Process organizers.Storyboards.Activity relationship charts (ARCs).Simulation games.15. Baxter customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company’s wholesale operation; the remainder was for the retail division. Costs allocated to the retail division are:$118,560.$203,000.$31,200.$193,440.$0.16. Willow Springs produces various wooden bookcases, tables, storage units, and chairs. Which of the following would be included in a listing of the company’s non-value-added activities?Transfer of chairs from the assembly line to the staining facility.Storage of completed bookcases in inventory.Transfer of chairs from the assembly line to the staining facility and storage of completed bookcases in inventory.Assembly of tables.Staining of storage units.17. Pound Industries’ customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company’s wholesale operation; the remainder was for the retail division. Costs allocated to the wholesale operation are:$31,200.$203,000.$118,560.$0.$193,440.18. Activity-based costing systems:often reveal products that were under- or over-costed by traditional costing systems.assign overhead to products based on the products’ relative usage of direct labor.use a single, volume-based cost driver.typically use fewer cost drivers than more traditional costing systems.have a tendency to distort product costs.19. Which of the following cost drivers would best be associated with the activity of physician time in a medical clinic?Physician minutes with a patient.Number of continuing patient visits.The number of accreditations held by the clinic.Number of line items on the clinic’s bill.Number of new patient visits.20. During a recent accounting period, Falcon Express’ shipping department processed 26 orders. Each order typically takes four hours to complete. However, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company’s non-value-added cost would be:$0.$1,820.$1,456.$56.$364.