Question 1

Which of these cost drivers is not a criteria for allocating costs?

Accepted Answer

A)  benefits received 
B)  fairness 
C)  standardisation 
D)  behavioural 
A)  benefits received 
B)  fairness 
C)  standardisation 
D)  behavioural C

Question 2

Costs that are common to many cost objects and cannot easily be traced to a specific cost object are known as indirect costs.

Accepted Answer

A) True 
 B)False  True

Question 3

An example of a cost tracing system is the time card which indicates how much time an employee has spent working on a particular job.

Accepted Answer

A) True 
 B)False  True

Question 4

Allocating indirect costs based on machine hours is an example of using an activity driver.

Accepted Answer

A) True 
 B)False

Question 5

A cost object cannot be:

Accepted Answer

A)  a geographic region 
B)  a customer 
C)  a department 
D)  none of the above, i.e. all can be cost objects 
A)  a geographic region 
B)  a customer 
C)  a department 
D)  none of the above, i.e. all can be cost objects

Question 6

Which of these is not an allocation method commonly used to allocate support department costs to operating departments?

Accepted Answer

A)  indirect method 
B)  direct method 
C)  step-down method 
D)  reciprocal method 
A)  indirect method 
B)  direct method 
C)  step-down method 
D)  reciprocal method

Question 7

The prime consideration when selecting a cost driver is the accuracy of the full cost measurement.

Accepted Answer

A) True 
 B)False

Question 8

Total costs for a firm vary depending on how many cost objects they have.

Accepted Answer

A) True 
 B)False

Question 9

Which of these is not an uncertainty when allocating support department costs?

Accepted Answer

A)  deciding whether to use dual or single rate allocations 
B)  identifying the appropriate cost driver 
C)  knowing which departments are support departments and which are operating departments 
D)  selecting the most appropriate allocation method 
A)  deciding whether to use dual or single rate allocations 
B)  identifying the appropriate cost driver 
C)  knowing which departments are support departments and which are operating departments 
D)  selecting the most appropriate allocation method

Question 10

If the cost object is the cosmetics department of a large department store which of the following is a direct cost?

Accepted Answer

A)  Advertising costs for the store's annual stock take sale. 
B)  Brand specific cosmetic product training. 
C)  The payroll department manager's yearly bonus payment 
D)  Security staff wages for the store. 
A)  Advertising costs for the store's annual stock take sale. 
B)  Brand specific cosmetic product training. 
C)  The payroll department manager's yearly bonus payment 
D)  Security staff wages for the store.

Question 11

Cost drivers can be volume drivers or activity drivers.

Accepted Answer

A) True 
 B)False

Question 12

Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. $$\begin{array} { | l | c | c | c | c | c | } 
\hline &  { \text { Support Departments } } &&& \text { Operating Departmeats } \
\hline & \text { Personnel } & \text { Cafeteria } & \text { Maintenance } & \text { Machining } & \text { Assernbly } \
\hline \text { Personnel } & & 10 \% & 20 \% & 30 \% & 40 \% \
\hline \text { Cafeteria } & 10 \% & & 20 \% & 40 \% & 30 \% \
\hline \text { Maintenance } & 10 \% & 20 \% & & 50 \% & 20 \% \
\hline
\end{array}$$ For the step-down method, what proportion of the Cafeteria's costs will be allocated to the Maintenance Department if the allocation order is Personnel, Cafeteria and Maintenance?

Accepted Answer

A)  20% 
B)  14.3% 
C)  22.2% 
D)  30% 
A)  20% 
B)  14.3% 
C)  22.2% 
D)  30%

Question 13

In determining the amount of indirect costs to be allocated to the cost object the first step is:

Accepted Answer

A)  to develop a cost allocation formula 
B)  to develop a predetermined cost rate 
C)  to select a cost driver 
D)  to decide on the number of cost pools 
A)  to develop a cost allocation formula 
B)  to develop a predetermined cost rate 
C)  to select a cost driver 
D)  to decide on the number of cost pools

Question 14

It is not important to use the dual rate method for support department allocations because most support department costs are variable.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is least likely to be a cost object for a car manufacturer:

Accepted Answer

A)  Human Resources Department 
B)  Assembly Division 
C)  Gordon Lee - a part time employee in the cafeteria. 
D)  Charlie's Car Company - a long term customer. 
A)  Human Resources Department 
B)  Assembly Division 
C)  Gordon Lee - a part time employee in the cafeteria. 
D)  Charlie's Car Company - a long term customer.

Question 16

The costs of the human resources department of an organisation are allocated to other departments at the rate of $150 per employee in the department. If Department A has 38 employees and Department B has 90 the human resource costs allocated to Department B will be $13,500.

Accepted Answer

A) True 
 B)False

Question 17

Paws Pet Resort and Spa is located in Christchurch. The company employs three pet attendants, four pet groomers and two front office staff who book appointments and keep records. The spa provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is cost per day of boarding, which of the following is an indirect cost?

Accepted Answer

A)  Pet food 
B)  Front office staff salaries 
C)  Cleaning costs for the kennels. 
D)  Maintenance on the kennels. 
A)  Pet food 
B)  Front office staff salaries 
C)  Cleaning costs for the kennels. 
D)  Maintenance on the kennels.

Question 18

The formula for calculating a predetermined indirect cost rate is:

Accepted Answer

A)  actual indirect costs/actual usage of the cost driver 
B)  budgeted indirect costs/actual usage of the cost driver 
C)  budgeted indirect costs/budgeted usage of the cost driver 
D)  actual indirect costs/budgeted usage of the cost driver 
A)  actual indirect costs/actual usage of the cost driver 
B)  budgeted indirect costs/actual usage of the cost driver 
C)  budgeted indirect costs/budgeted usage of the cost driver 
D)  actual indirect costs/budgeted usage of the cost driver

Question 19

Some costs are treated as indirect because it is too difficult or costly to trace them directly to the cost object.

Accepted Answer

A) True 
 B)False

Question 20

The direct method of allocating support department costs ignores the fact that support departments provide services to other support departments.

Accepted Answer

A) True 
 B)False

Which of these cost drivers is not a criteria for allocating costs?

Costs that are common to many cost objects and cannot easily be traced to a specific cost object are known as indirect costs.

An example of a cost tracing system is the time card which indicates how much time an employee has spent working on a particular job.

Allocating indirect costs based on machine hours is an example of using an activity driver.

A cost object cannot be:

Which of these is not an allocation method commonly used to allocate support department costs to operating departments?

The prime consideration when selecting a cost driver is the accuracy of the full cost measurement.

Total costs for a firm vary depending on how many cost objects they have.

Which of these is not an uncertainty when allocating support department costs?

If the cost object is the cosmetics department of a large department store which of the following is a direct cost?

Cost drivers can be volume drivers or activity drivers.

In determining the amount of indirect costs to be allocated to the cost object the first step is:

It is not important to use the dual rate method for support department allocations because most support department costs are variable.

Which of the following is least likely to be a cost object for a car manufacturer:

The costs of the human resources department of an organisation are allocated to other departments at the rate of $150 per employee in the department. If Department A has 38 employees and Department B has 90 the human resource costs allocated to Department B will be $13,500.

The formula for calculating a predetermined indirect cost rate is:

Some costs are treated as indirect because it is too difficult or costly to trace them directly to the cost object.

The direct method of allocating support department costs ignores the fact that support departments provide services to other support departments.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 3: A Costing Framework and Cost Allocation

Which of these cost drivers is not a criteria for allocating costs?

Costs that are common to many cost objects and cannot easily be traced to a specific cost object are known as indirect costs.

An example of a cost tracing system is the time card which indicates how much time an employee has spent working on a particular job.

Allocating indirect costs based on machine hours is an example of using an activity driver.

A cost object cannot be:

Which of these is not an allocation method commonly used to allocate support department costs to operating departments?

The prime consideration when selecting a cost driver is the accuracy of the full cost measurement.

Total costs for a firm vary depending on how many cost objects they have.

Which of these is not an uncertainty when allocating support department costs?

If the cost object is the cosmetics department of a large department store which of the following is a direct cost?

Cost drivers can be volume drivers or activity drivers.

In determining the amount of indirect costs to be allocated to the cost object the first step is:

It is not important to use the dual rate method for support department allocations because most support department costs are variable.

Which of the following is least likely to be a cost object for a car manufacturer:

The costs of the human resources department of an organisation are allocated to other departments at the rate of $150 per employee in the department. If Department A has 38 employees and Department B has 90 the human resource costs allocated to Department B will be $13,500.

The formula for calculating a predetermined indirect cost rate is:

Some costs are treated as indirect because it is too difficult or costly to trace them directly to the cost object.

The direct method of allocating support department costs ignores the fact that support departments provide services to other support departments.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters