Question 1

The purpose that tends to dominate cost allocation

Accepted Answer

The answer of The purpose that tends to dominate cost...

Question 2

Revenues less costs solely associated with by-products are added to the cost of the main products.

Accepted Answer

A) True 
 B)False

Question 3

Joint costs are allocated to main products but not to by-products.

Accepted Answer

A) True 
 B)False

Question 4

Products or services are the final cost objectives.

Accepted Answer

A) True 
 B)False

Question 5

Joint costs include all inputs of material, labor, and overhead costs that are incurred after the split-off point.

Accepted Answer

A) True 
 B)False

Question 6

Cost distribution is the allocation of total departmental costs to the revenue-producing products or services.

Accepted Answer

A) True 
 B)False

Question 7

The best cost driver for janitorial services is square feet.

Accepted Answer

A) True 
 B)False

Question 8

This joint cost allocation method requires a common physical unit for measuring the output of each product

Accepted Answer

Physical-u

Question 9

The direct method is generally better because it recognizes the effects of the most significant support provided by service departments to other service departments.

Accepted Answer

A) True 
 B)False

Question 10

Gibson 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 Mixing Department should be _____.

Accepted Answer

A) $75,000 
B) $72,000 
C) $48,000 
D) $62,500 
A) $75,000 
B) $72,000 
C) $48,000 
D) $62,500

Question 11

Wolf Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Wolf 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 C would be _____.

Accepted Answer

A) $800,000 
B) $720,000 
C) $514,286 
D) $400,000 
A) $800,000 
B) $720,000 
C) $514,286 
D) $400,000

Question 12

Bush Company has two departments, Get and Go.Relevant information is presented below: $\begin{array} { l l l }&\text { Get }&\text { Go }\ \text { Budgeted Sales } & \$ 500,000 & \$ 2,000,000 \ \text { Actual Sales } & \$ 300,000 & \$ 2,100,000 \end{array}$ If the total advertising expense is $540,000 and it is allocated based on sales using the preferred method, then the amount allocated to the Get Department should be _____.

Accepted Answer

A) $108,000 
B) $37,500 
C) $262,500 
D) $250,000 
A) $108,000 
B) $37,500 
C) $262,500 
D) $250,000

Question 13

Cardinal Company processes copper ore into two products, C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Robin 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.Suppose that C cannot be sold at the split-off point.Instead, it must be processed further at a cost of $100,000, after which it can be sold for $45 per pound.The amount of joint cost allocated to product C would be _____.

Accepted Answer

A) $800,000 
B) $720,000 
C) $816,000 
D) $384,000 
A) $800,000 
B) $720,000 
C) $816,000 
D) $384,000

Question 14

Falcon Company manufactures three products from a joint process.Joint costs for the year amounted to $300,000.The following data are also available: $\begin{array}{l}
&&\text { Sales Value at }\
\text { Product } & \text { Units Produced } & \text { Split-off } \
\mathrm{X} & 5,000 & \$ 70,000 \
\mathrm{Y} & 3,000 & \$ 30,000 \
\mathrm{Z} & 2,000 & \$ 100,000
\end{array}$ Assuming the physical-units method of allocating joint costs, the amount of joint costs allocated to product Y would be _____.

Accepted Answer

A) $90,000 
B) $300,000 
C) $37,500 
D) $30,000 
A) $90,000 
B) $300,000 
C) $37,500 
D) $30,000

Question 15

Some cost-allocation methods provide for penalties to managers that over-predict potential usage of a cost driver.

Accepted Answer

A) True 
 B)False

Question 16

_____ is the least likely alternative to be used to allocate costs.

Accepted Answer

A) Using a different cost driver for each cost pool 
B) Allocating all costs evenly to all other departments 
C) Allocating some cost pools using cost drivers and leaving other cost pools unallocated 
D) Using one cost driver to allocate all department costs 
A) Using a different cost driver for each cost pool 
B) Allocating all costs evenly to all other departments 
C) Allocating some cost pools using cost drivers and leaving other cost pools unallocated 
D) Using one cost driver to allocate all department costs

Question 17

The direct method ignores other service departments when any given service department's costs are allocated to the revenue-producing operating) departments.

Accepted Answer

A) True 
 B)False

Question 18

Roller 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 direct method is used to allocate costs, then the cost of the Personnel Department after the Maintenance Department cost allocation would be _____.

Accepted Answer

A) $33,600 
B) $39,900 
C) $38,640 
D) $63,840 
A) $33,600 
B) $39,900 
C) $38,640 
D) $63,840

Question 19

Public relations and top corporate management overhead are examples of central services.

Accepted Answer

A) True 
 B)False

The purpose that tends to dominate cost allocation

Revenues less costs solely associated with by-products are added to the cost of the main products.

Joint costs are allocated to main products but not to by-products.

Products or services are the final cost objectives.

Joint costs include all inputs of material, labor, and overhead costs that are incurred after the split-off point.

Cost distribution is the allocation of total departmental costs to the revenue-producing products or services.

The best cost driver for janitorial services is square feet.

This joint cost allocation method requires a common physical unit for measuring the output of each product

The direct method is generally better because it recognizes the effects of the most significant support provided by service departments to other service departments.

Some cost-allocation methods provide for penalties to managers that over-predict potential usage of a cost driver.

_____ is the least likely alternative to be used to allocate costs.

The direct method ignores other service departments when any given service department's costs are allocated to the revenue-producing operating) departments.

Public relations and top corporate management overhead are examples of central services.

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 purpose that tends to dominate cost allocation

Revenues less costs solely associated with by-products are added to the cost of the main products.

Joint costs are allocated to main products but not to by-products.

Products or services are the final cost objectives.

Joint costs include all inputs of material, labor, and overhead costs that are incurred after the split-off point.

Cost distribution is the allocation of total departmental costs to the revenue-producing products or services.

The best cost driver for janitorial services is square feet.

This joint cost allocation method requires a common physical unit for measuring the output of each product

The direct method is generally better because it recognizes the effects of the most significant support provided by service departments to other service departments.

Some cost-allocation methods provide for penalties to managers that over-predict potential usage of a cost driver.

_____ is the least likely alternative to be used to allocate costs.

The direct method ignores other service departments when any given service department's costs are allocated to the revenue-producing operating) departments.

Public relations and top corporate management overhead are examples of central services.

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