Multiple choice

1.   _____ is not a cost driver representing an “ability to bear” philosophy. 

 a.  Revenue of each division 

 b. Cost of goods sold by each division 

 c. Total cost before central cost allocation in later division 

 d. Usage 

2. _____ is least likely to be a cost driver as a basis for applying overhead costs. 

 a. Direct-labor cost

 b. Indirect labor hours 

 c. Machine hours  

 d. Production setups 

3.  The excess of actual overhead over the overhead applied to products is called _____. 

 a. over applied overhead 

 b. under applied overhead 

 c. overestimated overhead 

 d. prorated overhead 

4. _____ is (are) used for external reporting. 

 a. Absorption costing 

 b. Variable costing 

 c. Direct costing 

 d. Absorption costing and variable costing