managerial accounting part viii

Question 1

An activity-based overhead rate is computed as follows:

a. actual overhead divided by actual use of cost drivers.
b. estimated overhead divided by actual use of cost drivers.
c. actual overhead divided by estimated use of cost drivers.
d. estimated overhead divided by estimated use of cost drivers.

Answer 1

d. estimated overhead divided by estimated use of cost drivers.

Question 2

Prices are set by the competitive market when

a. the product is specially made for a customer.
b. there are no other producers capable of manufacturing a similar item.
c. a company can effectively differentiate its product from others.
d. a product is not easily distinguished from competing products.

Answer 2

d. a product is not easily distinguished from competing products.

Question 3

The cost-plus pricing approach’s major advantage is

a. it considers customer demand.
b. that sales volume has no effect on per unit costs.
c. it is simple to compute.
d. it can be used to determine a product’s target cost.

Answer 3

c. it is simple to compute.