Question 1. A significant limitation of activity-based costing is the

• attention given to indirect cost allocation.
• many necessary calculations.
• operations staff's attitude toward the accounting staff.
• use it makes of technology.

Question 2. Ireland Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 80,000. What is the budgeted indirect cost allocation rate for this activity?

• $0.50
• $1.00
• $1.50
• $2.25

Question 3. Fixed overhead costs include 

• the cost of sales commissions.
• property taxes paid on plant facilities.
• indirect materials.
• energy costs.

Question 4. Information pertaining to Brenton Corporation's sales revenue is presented in the following table:

                                February              March               April

Cash Sales                    $160,000          $150,000         $120,000
Credit Sales                   300,000           400,000           280,000
Total Sales                     $460,000         $550,000          $400,000

Management estimates that 5% of credit sales are not collectible.  Of the credit sales that are collectible, 75% are collected in the month of sale and the remainder in the month following the sale.  Cost of purchases of inventory each month are 80% of the next month's projected total sales.  All purchases of inventory are on account; 50% are paid in the month of purchase, and the remainder is paid in the month following the purchase.

Brenton's budgeted total cash receipts in April are

• $448,000.
• $414,500.
• $431,600.
• $328,000.

Question 5. Budgeting provides all of the following except

• a means to communicate the organization's short-term goals to its members.
• support for the management functions of planning and coordination.
• a means to anticipate problems.
• an ethical framework for decision making.

Question 6. The cost function y = 1,000 + 5X

• represents a fixed cost.
• is not a straight line.
• has an intercept of 1,000.
• has a slope coefficient of 1,000.

Question 7. Which cost estimation method uses a formal mathematical method to develop cost functions based on past data?

• Quantitative analysis method
• Industrial engineering method
• Account analysis method
• Conference method