6. Overhead allocation based solely on a measure of volume such as direct labor-

Question

6. Overhead allocation based solely on a measure of volume such as direct labor-hours: A. is a key aspect of the activity-based costing model. B. will systematically overcost high-volume products and undercost low-volume products. C. will systematically overcost low-volume products and undercost high-volume products. D. must be used for external financial reporting. Arranging for a shipment of a number of different products to a customer is an example of an activity at which of the following levels? A. Unit-level activity. B. Batch-level activity. C. Customer-level activity D. Organization-sustaining activity. 7. Testing a prototype of a new product is an example of a: A. Unit-level activity B. Batch-level activity C. Product-level activity. D. Organization-sustaining activity. 8.

Explanation / Answer

6. (B) will systematically overcost high-volume products and undercost low-volume products.

7. (B) batch-level activity

8. (C) product-level activity

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