Reference no: EM132950348

Problem 1: A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?

Option 1: The costs of wood and glue would be treated as direct costs.
Option 2: Wood would be accounted for as a direct cost, and glue and varnish as indirect costs.
Option 3: Wood, glue, and varnish would all be direct materials.
Option 4: The concepts of direct and indirect costs are not applicable here.

Problem 2: Cost allocation involves

Option 1: Identifying an appropriate cost driver.
Option 2: calculating an allocation rate for the cost to be allocated.
Option 3: multiplying the allocation rate by the weight or amount of the cost driver.
Option 4: all of these.