Reference no: EM131728585

1-Answer the following questions using the information below:

Luzent Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.

If advertising expense of $483,000 is allocated on the basis of sales, the cost per cost driver rate would be ________.

• A. $0.23 per dollar of sales
• B. $0.22 per dollar of sales
• C. $0.25 per dollar of sales
• D. $0.24 per dollar of sales

2-Which of the following statements is true of costing systems?

• ABC systems classify some indirect costs as direct costs helping to improve processes
• Singleminus-indirect cost pool systems always result in overcosting of products.
• ABC systems always result in overcosting of products.
• Singleminus-indirect

3-cost pool systems classify some direct costs as indirect costs.

4-Productminus-cost crossminus-subsidization
________.

• means that if a company undercosts one of its products, it will overcost at least one of its other products
• exists only when one overcosted product results in all other products being overcosted
• exists when one overcosted product results in more than one other product being overcosted
• means that if a company undercosts more than one of its products, it will overcost more than one of its other products

4-Which of the following statements is true of a peanutminus-butter costing system?

• A peanutminus-butter costing system typically has moreminus-homogeneous indirect cost pools.
• In a peanutminus-butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume.
• A peanutminus-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects.
• A peanutminus-butter costing system assumes that all costs are variable.

5-Which of the following statements is true of activity minus-based costing?

• In activity minus-based costing, direct laborminus-hours is always the best allocation base to allocate all nonminus-manufacturing indirect costs.
• The main advantage of activityminus-based costing over peanutminus-butter costing is the accurate distribution of all direct costs to the products.
• Activity based costing is more suited to companies with high product diversity than companies with single product line.
• Activity based costing broadly averages or spreads the cost of resources uniformly to cost objects such as products or services.