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

A) 60% B) 40% C) 57.1% D) 42.9% A) 60% B) 40% C) 57.1% D) 42.9%

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

A) 62.5% B) 10% C) 42.9% D) 37.5% A) 62.5% B) 10% C) 42.9% D) 37.5%

Exam 3: A Costing Framework and Cost Allocation

While the basic costing structure for entities is similar, the number of cost pools and types of cost driver used are dependent upon the entity's specific cost information needs.

(True/False)

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Question 21

Smart Choices allocates advertising expenses to its two departments, Lifestyle and Storage Solutions, using sales as the cost driver. For the current year the sales for Lifestyle are estimated to be $450,000 and for department Storage Solutions $900,000 and total advertising expenses are budgeted at $110,000. The indirect cost rate is:

(Multiple Choice)

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Question 22

To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:

(Multiple Choice)

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Question 23

Direct costs can also be referred to as overhead costs.

(True/False)

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Question 24

Smart Choices allocates indirect labour costs to its two departments, Lifestyle and Storage Solutions using number of employees per department as the cost driver. For the current year the number of employees in department Lifestyle are estimated to be 50 and for Storage Solutions department 30 and total indirect labour costs for the departments are budgeted at $1,400,000. The amount allocated to the departments are:

(Multiple Choice)

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Question 25

If the cost object is the production department in a large manufacturing firm which of these would be a direct cost?

(Multiple Choice)

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Question 26

The only cost object for a manufacturing firm is the finished product.

(True/False)

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Question 27

The glue used on the spines of mass produced textbooks is an example of an indirect cost.

(True/False)

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Question 28

There are two support departments, Accounting and Catering. Accounting provides 5% of its services to Catering. Catering provides 10% of its services to Accounting. Catering should be allocated first in the step down method.

(True/False)

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Question 29

Understanding how costs are incurred help organisations to remain competitive and generate a profit.

(True/False)

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Question 30

Allocated indirect cost information can sometimes be low quality. Allocating indirect costs can be improved by:

(Multiple Choice)

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Question 31

The total cost allocated is the same under the direct method, step down method and the reciprocal method.

(True/False)

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Question 32

Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. Support Departments Operating Departments Persennel Cafeteria Maintenance Machining Assenbly Maintenance 10\% 20\% 30\% 40\% Cafeteria 10\% 20\% 40\% 30\% Personnel 10\% 20\% 50\% 20\% For the step-down method, what proportion of the Maintenance Department's costs will be allocated to the Assembly Department if the allocation order is Personnel, Cafeteria and Maintenance?

(Multiple Choice)

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Question 33

Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. Support Departments Operating Departments Personnel Cafeteria Maintenance Machining Assernbly Personnel 10\% 10\% 50\% 30\% Cafeteria 10\% 10\% 40\% 40\% Maintenance 10\% 20\% 50\% 20\% For the direct method, what proportion of the Personnel's costs will be allocated to the Machining Department?

(Multiple Choice)

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Question 34

A cost object is anything for which a separate measurement of cost is required.

(True/False)

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Question 35

Support departments provide internal services to each other and the operating departments.

(True/False)

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Question 36

To develop a cost allocation formula entities need to decide on the number of indirect cost pools.

(True/False)

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Question 37

One reason that entities allocate indirect costs to cost objects is to encourage the use of central resources.

(True/False)

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Question 38

The full cost of a cost object includes direct costs plus allocated indirect costs.

(True/False)

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Question 39

The allocation method for support department costs that allocates fixed and variable costs separately is:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 91

While the basic costing structure for entities is similar, the number of cost pools and types of cost driver used are dependent upon the entity's specific cost information needs.

To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:

Direct costs can also be referred to as overhead costs.

If the cost object is the production department in a large manufacturing firm which of these would be a direct cost?

The only cost object for a manufacturing firm is the finished product.

The glue used on the spines of mass produced textbooks is an example of an indirect cost.

There are two support departments, Accounting and Catering. Accounting provides 5% of its services to Catering. Catering provides 10% of its services to Accounting. Catering should be allocated first in the step down method.

Understanding how costs are incurred help organisations to remain competitive and generate a profit.

Allocated indirect cost information can sometimes be low quality. Allocating indirect costs can be improved by:

The total cost allocated is the same under the direct method, step down method and the reciprocal method.

A cost object is anything for which a separate measurement of cost is required.

Support departments provide internal services to each other and the operating departments.

To develop a cost allocation formula entities need to decide on the number of indirect cost pools.

One reason that entities allocate indirect costs to cost objects is to encourage the use of central resources.

The full cost of a cost object includes direct costs plus allocated indirect costs.

The allocation method for support department costs that allocates fixed and variable costs separately is:

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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