Question 1

The predetermined lump-sum approach to allocating fixed costs is based on the short-run usage, regardless of actual usage from month to month.

Accepted Answer

A) True 
 B)False

Question 2

Type 2 allocations are cost that flow from _____.

Accepted Answer

A) one organizational unit to another 
B) the accounting system to an organizational unit 
C) one organizational unit to the product 
D) the product to the customer 
A) one organizational unit to another 
B) the accounting system to an organizational unit 
C) one organizational unit to the product 
D) the product to the customer

Question 3

Theresa Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the direct method is used to allocate costs, then the total cost of the Mixing Department after allocation would be _____.

Accepted Answer

A) $213,000 
B) $72,000 
C) $36,143 
D) $105,000 
A) $213,000 
B) $72,000 
C) $36,143 
D) $105,000

Question 4

Gomez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year _____. $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the step-down method is used to allocate costs and the Maintenance Department is allocated first, the amount of overhead that would be allocated from Maintenance to Mixing is:

Accepted Answer

A) $36,000 
B) $42,750 
C) $42,000 
D) $63,000 
A) $36,000 
B) $42,750 
C) $42,000 
D) $63,000

Question 5

Rayburn Company has two departments, Hot and Cold.Relevant information is presented below: $\begin{array}{lrr}&\text { Hot } &\text { Cold }\
\text { Square footage } & 1,500 & 4,500 \
\text { Number of employees } & 280 & 120
\end{array}$ If total payroll processing costs are $30,000 and they are allocated based on number of employees, the amount allocated to the Hot Department should be _____.

Accepted Answer

A) $21,000 
B) $6,000 
C) $4,000 
D) $7,200 
A) $21,000 
B) $6,000 
C) $4,000 
D) $7,200

Question 6

Companies must assign all production costs and only production costs for external financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 7

Square feet is the best cost driver for depreciation of heating and air conditioning equipment.

Accepted Answer

A) True 
 B)False

Question 8

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

Accepted Answer

A) True 
 B)False

Question 9

_____ is not likely to be an activity in an activity?based costing system.

Accepted Answer

A) Materials handling 
B) Inspection 
C) Accounting 
D) Assembly 
A) Materials handling 
B) Inspection 
C) Accounting 
D) Assembly

Question 10

Power costs are normally allocated using megawatt hours as the cost driver.

Accepted Answer

A) True 
 B)False

Question 11

When using the "ability to bear" philosophy in allocating central service costs, actual sales are preferable to budgeted sales.

Accepted Answer

A) True 
 B)False

Question 12

Murphy Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are alloated based on number of employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Mixing is _____.

Accepted Answer

A) $31,500 
B) $58,500 
C) $63,000 
D) $78,000 
A) $31,500 
B) $58,500 
C) $63,000 
D) $78,000

Question 13

A method for allocating service department costs that recognizes that some service departments support the activities in other service departments as well as those in operating departments

Accepted Answer

The answer of A method for allocating service department costs...

Question 14

Valdez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated
Based on square footage while personnel costs are allocated based on number of
Employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 5,600 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } & 16 & 24 & 48 & 64
\end{array}$ If the step?down method is used to allocate costs and the Maintenance Department is allocated first, the amount of overhead that would be allocated from Maintenance to Personnel is _____.

Accepted Answer

A) $6,300 
B) $5,040 
C) $16,800 
D) $0 
A) $6,300 
B) $5,040 
C) $16,800 
D) $0

Question 15

Nosotros Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated
Based on square footage while personnel costs are allocated based on number of
Employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } & 16 & 24 & 48 & 64
\end{array}$ If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Personnel is _____.

Accepted Answer

A) $6,825 
B) $6,300 
C) $5,040 
D) $0 
A) $6,825 
B) $6,300 
C) $5,040 
D) $0

Question 16

In general, allocating fixed cost is less challenging than allocating variable cost.

Accepted Answer

A) True 
 B)False

Question 17

Hawn Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: $\begin{array}{cccc} 
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 30,000 & \$ 36,000 & \$ 9,000
\end{array}$ If activity?based costing is used, the cost assigned to the standard model using the number of setups would be _____.

Accepted Answer

A) $13,200 
B) $8,400 
C) $44,000 
D) $33 
A) $13,200 
B) $8,400 
C) $44,000 
D) $33

Question 18

Derby Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the step-down method is used to allocate costs and the Personnel Department is allocated first, then the cost of the Finishing Department after allocation would be _____.

Accepted Answer

A) $175,000 
B) $277,000 
C) $279,250 
D) $275,500 
A) $175,000 
B) $277,000 
C) $279,250 
D) $275,500

Question 19

Costs are accumulated in traditional and ABC systems by _____.

Accepted Answer

A) activities and organizational units, respectively 
B) organizational units and activities, respectively 
C) activities and activities, respectively 
D) organizational units and organizational units, respectively 
A) activities and organizational units, respectively 
B) organizational units and activities, respectively 
C) activities and activities, respectively 
D) organizational units and organizational units, respectively

Question 20

Kevin Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } & 8 & 12 & 24 & 32
\end{array}$ If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is _____.

Accepted Answer

A) $42,000 
B) $72,000 
C) $31,500 
D) $105,000 
A) $42,000 
B) $72,000 
C) $31,500 
D) $105,000

The predetermined lump-sum approach to allocating fixed costs is based on the short-run usage, regardless of actual usage from month to month.

Type 2 allocations are cost that flow from _____.

Companies must assign all production costs and only production costs for external financial reporting purposes.

Square feet is the best cost driver for depreciation of heating and air conditioning equipment.

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

_____ is not likely to be an activity in an activity?based costing system.

Power costs are normally allocated using megawatt hours as the cost driver.

When using the "ability to bear" philosophy in allocating central service costs, actual sales are preferable to budgeted sales.

A method for allocating service department costs that recognizes that some service departments support the activities in other service departments as well as those in operating departments

In general, allocating fixed cost is less challenging than allocating variable cost.

Costs are accumulated in traditional and ABC systems by _____.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making With a Focus on Pricing Decisions

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 12: Cost Allocation

The predetermined lump-sum approach to allocating fixed costs is based on the short-run usage, regardless of actual usage from month to month.

Type 2 allocations are cost that flow from _____.

Companies must assign all production costs and only production costs for external financial reporting purposes.

Square feet is the best cost driver for depreciation of heating and air conditioning equipment.

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

_____ is not likely to be an activity in an activity?based costing system.

Power costs are normally allocated using megawatt hours as the cost driver.

When using the "ability to bear" philosophy in allocating central service costs, actual sales are preferable to budgeted sales.

A method for allocating service department costs that recognizes that some service departments support the activities in other service departments as well as those in operating departments

In general, allocating fixed cost is less challenging than allocating variable cost.

Costs are accumulated in traditional and ABC systems by _____.

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making With a Focus on Pricing Decisions

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters