Question 1

Which of the following statements is true concerning lump-sum allocations of service department costs?

Accepted Answer

A)  They make fixed costs appear to be variable to the manager receiving the allocation. 
B) They are not affected by the activity level in the department receiving the allocation. 
C) They make fixed costs appear to be variable to the manager receiving the allocation and are not affected by the activity level in the department receiving the allocation. 
D) They do not make fixed costs appear to be variable to the manager receiving the allocation and are affected by the activity level in the department receiving the allocation 
A)  They make fixed costs appear to be variable to the manager receiving the allocation. 
B) They are not affected by the activity level in the department receiving the allocation. 
C) They make fixed costs appear to be variable to the manager receiving the allocation and are not affected by the activity level in the department receiving the allocation. 
D) They do not make fixed costs appear to be variable to the manager receiving the allocation and are affected by the activity level in the department receiving the allocation

Question 2

Teal Sports offers 2 different types of water sport activities-sailfish rental and banana boat rides.The company has two different activities-lifeguarding and maintenance-that provide input into its cost objectives.Data on estimated overhead for the year follows: $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Activity } & \text { Driver } & \begin{array} { c } 
\text { Estim ated } \
\text { Overhead } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Sailfish Rental } \
\text { Estimate }
\end{array} & \begin{array} { c } 
\text { Boat Rides } \
\text { Estimate }
\end{array} \
\hline \text { Lifeguarding } & \text { \# of Labor hours } & \$ 63,940 & 3,280 \text { hours } & 2,280 \text { hours } \
\hline \text { Maintenance } & \text { Hours of riding time } & \$ 88,000 & 1,500 \text { hours } & 2,500 \text { hours } \
\hline
\end{array}$$ What overhead rates will be used in each department to assign costs to the banana boat rides? $$\begin{array} { c c c } 
& \text { Lifeguarding } & \text { Maintenance } \
\text { A. } & \$ 28.04 & \$ 22.00 \
\text { B. } & \$ 11.50 & \$ 22.00 \
\text { C. } & \$ 28.04 & \$ 35.20 \
\text { D. } & \$ 11.50 & \$ 35.20
\end{array}$$

Accepted Answer

The answer of Teal Sports offers 2 different types of...

Question 3

Indirect costs occur because resources are shared by more than one cost objective.

Accepted Answer

A) True 
 B)False

Question 4

The allocation base selected should ideally have a relative benefits relationship with the costs to be allocated.

Accepted Answer

A) True 
 B)False

Which of the following statements is true concerning lump-sum allocations of service department costs?

Indirect costs occur because resources are shared by more than one cost objective.

The allocation base selected should ideally have a relative benefits relationship with the costs to be allocated.

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Variable Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Standard Costs and Variance Analysis

Decentralization and Performance Evaluation

Statement of Cash Flows

Analyzing Financial Statements: a Managerial Perspective

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Exam 6: Cost Allocation and Activity-Based Costing

Which of the following statements is true concerning lump-sum allocations of service department costs?

Indirect costs occur because resources are shared by more than one cost objective.

The allocation base selected should ideally have a relative benefits relationship with the costs to be allocated.

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Variable Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Standard Costs and Variance Analysis

Decentralization and Performance Evaluation

Statement of Cash Flows

Analyzing Financial Statements: a Managerial Perspective

Filters