ACTY 2110 EXAM 1 QUESTIONS WITH VERIFIED ACCURATE
ANSWERS
1. A volume-based allocation measure is directly related to the number of units
produced or the number of customers served.
true or false: true
2. Activity-based costing systems include non-volume-based cost
drivers. true or false: true
3. Activity-based costing is not appropriate for service providers since they do
not have manufacturing overhead that needs to be assigned to products.
true or false: false
Service providers can also benefit from ABC to allocate indirect costs like administrative or support activities.
4. Activity-based management is a method of assigning indirect costs to prod-
ucts or services based on the activities they require.
true or false: true
5. Process costing is used to calculate the cost of homogeneous goods
or services.
true or false: true
6. A separate Work in Process Inventory account is used for each major produc-
tion process in process costing.
true or false: true
7. Process costing often combines direct materials and direct labor into a single
category called "conversion costs."
true or false: false
Conversion costs = Direct Labor + Manufacturing Overhead (not direct materials).
8. Equivalent units for materials may differ from the equivalent units for conver-
1/
15
, sion costs.
true or false: true
9. An equivalent unit is a measure used to convert costs incurred in the
previous period to costs incurred in the current period.
true or false: false
Equivalent units measure the amount of work done, not for shifting costs between periods.
10. Cost per equivalent unit is calculated separately for direct materials and for
conversion costs.
true or false: true
2/
15
ANSWERS
1. A volume-based allocation measure is directly related to the number of units
produced or the number of customers served.
true or false: true
2. Activity-based costing systems include non-volume-based cost
drivers. true or false: true
3. Activity-based costing is not appropriate for service providers since they do
not have manufacturing overhead that needs to be assigned to products.
true or false: false
Service providers can also benefit from ABC to allocate indirect costs like administrative or support activities.
4. Activity-based management is a method of assigning indirect costs to prod-
ucts or services based on the activities they require.
true or false: true
5. Process costing is used to calculate the cost of homogeneous goods
or services.
true or false: true
6. A separate Work in Process Inventory account is used for each major produc-
tion process in process costing.
true or false: true
7. Process costing often combines direct materials and direct labor into a single
category called "conversion costs."
true or false: false
Conversion costs = Direct Labor + Manufacturing Overhead (not direct materials).
8. Equivalent units for materials may differ from the equivalent units for conver-
1/
15
, sion costs.
true or false: true
9. An equivalent unit is a measure used to convert costs incurred in the
previous period to costs incurred in the current period.
true or false: false
Equivalent units measure the amount of work done, not for shifting costs between periods.
10. Cost per equivalent unit is calculated separately for direct materials and for
conversion costs.
true or false: true
2/
15
