Question 1

Costs allocated as budget unit rate times actual usage

Accepted Answer

Variable c

Question 2

_____ is not likely to be a cost driver.

Accepted Answer

A) Production orders 
B) Material requisitions 
C) A cost accountant's labor hours 
D) Product inspections 
A) Production orders 
B) Material requisitions 
C) A cost accountant's labor hours 
D) Product inspections

Question 3

The two methods for allocating interdepartmental service costs are the _____.

Accepted Answer

A) step-down and indirect 
B) variable and fixed 
C) step-up and variable 
D) step-down and direct 
A) step-down and indirect 
B) variable and fixed 
C) step-up and variable 
D) step-down and direct

Question 4

The use of budgeted service department cost rates protects using departments from _____.

Accepted Answer

A) service department efficiencies 
B) price fluctuations 
C) service outages 
D) all of these answers are correct 
A) service department efficiencies 
B) price fluctuations 
C) service outages 
D) all of these answers are correct

Question 5

_____ should be used to allocate variable costs.

Accepted Answer

A) Budgeted unit rate x total budgeted units planned to be used 
B) Actual unit rate x total budgeted units planned to be used 
C) Budgeted unit rate x actual units used 
D) Actual unit rate x actual units used 
A) Budgeted unit rate x total budgeted units planned to be used 
B) Actual unit rate x total budgeted units planned to be used 
C) Budgeted unit rate x actual units used 
D) Actual unit rate x actual units used

Question 6

Max 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 $70,000) pooled together to arrive at the following information: $\begin{array}{cccc} 
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 20 & 15 & 375 \
\text { Deluxe } & 30 & 45 & 225 \
& & & \
\text { Costs per pool } & \$ 50,000 & \$ 9,000 & \$ 36,000
\end{array}$ If activity?based costing is used, _____ is the overhead rate per setup.

Accepted Answer

A) $1,000 
B) $150 
C) $60 
D) $117 
A) $1,000 
B) $150 
C) $60 
D) $117

Question 7

A by-product _____.

Accepted Answer

A) is individually identifiable before the split-off point 
B) is treated like a joint product 
C) has relatively insignificant total sales value 
D) receives a portion of allocated separable costs 
A) is individually identifiable before the split-off point 
B) is treated like a joint product 
C) has relatively insignificant total sales value 
D) receives a portion of allocated separable costs

Question 8

_____ is not a cost driver representing an "ability to bear" philosophy.

Accepted Answer

A) Revenue of each division 
B) Cost of goods sold by each division 
C) Total cost before central cost allocation in later division 
D) Usage 
A) Revenue of each division 
B) Cost of goods sold by each division 
C) Total cost before central cost allocation in later division 
D) Usage

Question 9

Coyote Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Coyote Company plans to produce 40,000 pounds of C and 20,000 pounds of U from 60,000 pounds of ore.C sells for $30 per pound and U sells for $40 per pound.Assuming the relative-sales-value method of allocating joint costs, the amount of joint cost allocated to product U would be _____.

Accepted Answer

A) $0 
B) $400,000 
C) $480,000 
D) $685,714 
A) $0 
B) $400,000 
C) $480,000 
D) $685,714

Question 10

Bobby Company has two production departments, Mixing and Finishing, served by one maintenance department.Budgeted fixed costs for the maintenance department were $40,000, and the variable cost per labor hour was $4.00.Other relevant data are as follows: $$\begin{array} { l r r } 
& \text { Mixing } & \text { Finishing } \
\text { Long-run capacity available* } & 18,000 & 12,000 \
\text { Budgeted* } & 12,000 & 10,500 \
\text { Actual* } & 15,000 & 9,000
\end{array}$$ *in labor hours
Actual maintenance department costs were $36,000 fixed and $100,000 variable.The amount of fixed maintenance costs allocated to the Finishing Department should be _____.

Accepted Answer

A) $18,000 
B) $16,000 
C) $14,000 
D) $11,250 
A) $18,000 
B) $16,000 
C) $14,000 
D) $11,250

Question 11

Allocating fixed costs based on long-range plans may inadvertently encourage managers to _____.

Accepted Answer

A) underutilize available capacity 
B) overestimate planned usage 
C) underestimate planned usage 
D) overestimate planned cost 
A) underutilize available capacity 
B) overestimate planned usage 
C) underestimate planned usage 
D) overestimate planned cost

Question 12

Type 3 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 13

Eisenhower 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 pooled together to arrive at the following information: $\begin{array}{cccc} 
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$ _____ is the total amount of overhead costs assigned to the standard model assuming traditional costing and applying overhead costs based on direct-labor hours is used.

Accepted Answer

A) $26,625 
B) $33,375 
C) $37,500 
D) $22,500 
A) $26,625 
B) $33,375 
C) $37,500 
D) $22,500

Question 14

Joint costs are not allocated to a by-product.

Accepted Answer

A) True 
 B)False

Question 15

Tardes 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: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 50,400 & \$ 35,000 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } & 16 & 24 & 48 & 64
\end{array}$ If the direct method is used to allocate costs, then the amount of overhead allocated from Personnel to Finishing would be _____.

Accepted Answer

A) $33,600 
B) $20,000 
C) $16,800 
D) $14,147 
A) $33,600 
B) $20,000 
C) $16,800 
D) $14,147

Question 16

Venice Company has two production departments, Mixing and Finishing, served by one maintenance department.Budgeted fixed costs for the maintenance department were $30,000, and the variable cost per labor hour was $5.00.Other relevant data are as follows: $\begin{array}{lrr}&\text { Mixing}&\text { Finishing }\
\text { Long-run capacity available** } & 20,000 & 15,000 \
\text { Budgeted* } & 12,000 & 10,500 \
\text { Actual* } & 15,000 & 9,000
\end{array}$ *in labor hours Actual maintenance department costs were $36,000 fixed and $100,000 variable.The amount of variable maintenance costs allocated to the Finishing Department should be _____.

Accepted Answer

A) $42,000 
B) $48,000 
C) $37,500 
D) $45,000 
A) $42,000 
B) $48,000 
C) $37,500 
D) $45,000

Question 17

The use of cost drivers such as division revenue or total assets represent an "ability to bear" philosophy.

Accepted Answer

A) True 
 B)False

Question 18

McClain 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, then the amount allocated to the Cold Department should be _____.

Accepted Answer

A) $10,500 
B) $9,000 
C) $18,000 
D) $6,000 
A) $10,500 
B) $9,000 
C) $18,000 
D) $6,000

Question 19

In the step-down method, the first service department in the sequence is the one that renders the _____departments.

Accepted Answer

A) most service to all other service 
B) most service to all producing 
C) least service to all producing 
D) least service to all other service 
A) most service to all other service 
B) most service to all producing 
C) least service to all producing 
D) least service to all other service

Question 20

_____ should be used to allocate fixed costs.

Accepted Answer

A) Actual fraction of capacity used x total budgeted fixed costs 
B) Budgeted fraction of capacity available for use x total budgeted fixed costs 
C) Actual fraction of capacity used x actual fixed costs 
D) Budgeted fraction of capacity available for use x actual fixed costs 
A) Actual fraction of capacity used x total budgeted fixed costs 
B) Budgeted fraction of capacity available for use x total budgeted fixed costs 
C) Actual fraction of capacity used x actual fixed costs 
D) Budgeted fraction of capacity available for use x actual fixed costs

Costs allocated as budget unit rate times actual usage

_____ is not likely to be a cost driver.

The two methods for allocating interdepartmental service costs are the _____.

The use of budgeted service department cost rates protects using departments from _____.

_____ should be used to allocate variable costs.

A by-product _____.

_____ is not a cost driver representing an "ability to bear" philosophy.

Allocating fixed costs based on long-range plans may inadvertently encourage managers to _____.

Type 3 allocations are cost that flow from _____.

Joint costs are not allocated to a by-product.

The use of cost drivers such as division revenue or total assets represent an "ability to bear" philosophy.

In the step-down method, the first service department in the sequence is the one that renders the _____departments.

_____ should be used to allocate fixed costs.

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

Costs allocated as budget unit rate times actual usage

_____ is not likely to be a cost driver.

The two methods for allocating interdepartmental service costs are the _____.

The use of budgeted service department cost rates protects using departments from _____.

_____ should be used to allocate variable costs.

A by-product _____.

_____ is not a cost driver representing an "ability to bear" philosophy.

Allocating fixed costs based on long-range plans may inadvertently encourage managers to _____.

Type 3 allocations are cost that flow from _____.

Joint costs are not allocated to a by-product.

The use of cost drivers such as division revenue or total assets represent an "ability to bear" philosophy.

In the step-down method, the first service department in the sequence is the one that renders the _____departments.

_____ should be used to allocate fixed costs.

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