Reference no: EM13755023

1. 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?

a. I only

b. II only

c. III only

d. I and III

e. II and III

2. Many traditional costing systems:

a. trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates

b. write off manufacturing overhead as an expense of the current period

c. combine widely varying elements of overhead into a single cost pool

d. use a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing

e. produce results far superior to those achieved with activity-based costing

3. The relationship between cost and activity is termed:

a. cost estimation

b. cost prediction

c. cost behavior

d. cost analysis

e. cost approximation

4. A forecast of a cost at a particular level of activity is termed:

a. cost estimation

b. cost prediction

c. cost behavior

d. cost analysis

e. cost approximation

5. Which of the following costs changes in direct proportion to a change in the activity level?

a. Variable cost

b. Fixed cost

c. Semivariable cost

d. Step-variable cost

e. Step-fixed cost