MULTIPLE CHOICE

1. Since overhead costs are indirect costs, _______. (Points : 1)

2. An actual cost system differs from a normal cost system in that an actual cost system ______. (Points : 1)

3. One reason annual overhead application rates are used is ______. (Points : 1)

4. When a manufacturing company has a highly automated manufacturing plant producing many different products, which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process? (Points : 1)

5. In the formula y = a + bX, y represents _______. (Points : 1)

6. If the level of activity increases, _______. (Points : 1)

7. An item or event that has a cause-effect relationship with the incurrence of a variable cost is called a _______. (Points : 1)

8. Reno Corporation uses a predetermined overhead application rate of $.30 per direct labor hour. During the year it incurred $345,000 dollars of actual overhead, but it planned to incur $360,000 of overhead. The company applied $363,000 of overhead during the year. How many direct labor hours did the company plan to incur? (Points : 1)

9. Gary Corporation has developed the following flexible budget formula for monthly overhead:
For output of less than 200,000 units: $36,600 + $.80(units)
For output of 200,000 units or more: $43,000 + $.80(units)

How much overhead should Gary expect if the firm plans to produce 200,000 units? (Points : 1)

10. Aztec Company is relocating its facilities. The company estimates that it will take three trucks to move office contents. If the per truck rental charge is $1,000 plus 25 cents per mile, what is the expected cost to move 800 miles? (Points : 1)