Question 1

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

Accepted Answer

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

Question 2

Reciprocal services are services provided by a service department to:

Accepted Answer

A)  another service department 
B)  external customers 
C)  a producing department 
D)  All of these answers are correct. 
A)  another service department 
B)  external customers 
C)  a producing department 
D)  All of these answers are correct. A

Question 3

There is no "best" cost allocation system.

Accepted Answer

A) True 
 B)False  True

Question 4

The cost pool should be a quantifiable measure of what causes costs.

Accepted Answer

A) True 
 B)False

Question 5

Service departments that support other service departments in addition to producing departments

Accepted Answer

Reciprocal

Question 6

Roosevelt Company processes copper ore into two products, C and U. The ore costs $5 per pound and conversion costs are $15 per pound. Roosevelt 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 physical- units method of allocating joint costs, the amount of joint costs to product C would be:

Accepted Answer

A)  $600,000 
B)  $0 
C)  $800,000 
D)  $200,000 
A)  $600,000 
B)  $0 
C)  $800,000 
D)  $200,000

Question 7

The allocation of total departmental costs to the revenue- producing products or services

Accepted Answer

Cost appli

Question 8

Eastman 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: $\begin{array}{lllll}
&\text { Maintenance }&\text { Personnel }&\text { Mixing }&\text { Finishing }\
\text { Direct dept.costs }&\$126,000&\$105,000&\$175,000&\$84,000\
\text { Square footage } & 800 & 400 & 1,600 & 1,200 \
\text { Number of employees } &8 & 12 & 24 & 32
\end{array}$ 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)  $78,000 
B)  $58,500 
C)  $31,500 
D)  $63,000 
A)  $78,000 
B)  $58,500 
C)  $31,500 
D)  $63,000

Question 9

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

Accepted Answer

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

Question 10

Joint costs are not allocated to a by- product.

Accepted Answer

A) True 
 B)False

Question 11

Examples of service departments include personnel, legal, and corporate accounting.

Accepted Answer

A) True 
 B)False

Question 12

Costs are accumulated in traditional and ABC systems by .

Accepted Answer

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

Question 13

If the vast majority of costs were directly traceable, then cost allocation would be a minor issue.

Accepted Answer

A) True 
 B)False

Question 14

The two methods for allocating interdepartmental service costs are the:

Accepted Answer

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

Question 15

Costs allocated as budget unit rate times actual usage

Accepted Answer

Variable c

Question 16

Lassie Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data are also available: $\begin{array}{lll}&&\text { Sales Value at }\
\text { Product }&\text { Units Produced }&\text { Split-off }\
\mathrm{X} & \mathbf{5 , 0 0 0} & \$ 70,000 \
\mathrm{Y} & \mathbf{3 , 0 0 0} & \$ 30,000 \
\mathrm{Z} & \mathbf{2 , 0 0 0} & \$ 100,000
\end{array}$ Assuming the physical- units method of allocating joint costs, the amount of joint costs allocated to product X would be:

Accepted Answer

A)  $70,000 
B)  $125,000 
C)  $250,000 
D)  $87,500 
A)  $70,000 
B)  $125,000 
C)  $250,000 
D)  $87,500

Question 17

Costs allocated as budgeted cost driver times total budgeted costs

Accepted Answer

Fixed cost

Question 18

Buenos 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: $$\begin{array} { l l l l l } 
\text { Maintenance } & & \text { Personnel } & \text { Mixing } & \text { Finishing } \
\text { Direct dept.costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } 16 & 24 & 48 & 64
\end{array}$$ If the direct method is used to allocate costs, then the amount of overhead allocated from Personnel to Finishing would be:

Accepted Answer

A)  $16,800 
B)  $14,147 
C)  $33,600 
D)  $19,200 
A)  $16,800 
B)  $14,147 
C)  $33,600 
D)  $19,200

Question 19

Joint costs are incurred:

Accepted Answer

A)  before the production process is started 
B)  after the process- further decision 
C)  before individual products are separately identified 
D)  after the split- off point but before the process- further decision 
A)  before the production process is started 
B)  after the process- further decision 
C)  before individual products are separately identified 
D)  after the split- off point but before the process- further decision

Question 20

ABC systems focus on accumulating costs into key activities, rather than into organizational units.

Accepted Answer

A) True 
 B)False

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

Reciprocal services are services provided by a service department to:

There is no "best" cost allocation system.

The cost pool should be a quantifiable measure of what causes costs.

Service departments that support other service departments in addition to producing departments

The allocation of total departmental costs to the revenue- producing products or services

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

Joint costs are not allocated to a by- product.

Examples of service departments include personnel, legal, and corporate accounting.

Costs are accumulated in traditional and ABC systems by .

If the vast majority of costs were directly traceable, then cost allocation would be a minor issue.

The two methods for allocating interdepartmental service costs are the:

Costs allocated as budget unit rate times actual usage

Costs allocated as budgeted cost driver times total budgeted costs

Joint costs are incurred:

ABC systems focus on accumulating costs into key activities, rather than into organizational units.

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Filters

Exam 12: Cost Allocation

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

Reciprocal services are services provided by a service department to:

There is no "best" cost allocation system.

The cost pool should be a quantifiable measure of what causes costs.

Service departments that support other service departments in addition to producing departments

The allocation of total departmental costs to the revenue- producing products or services

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

Joint costs are not allocated to a by- product.

Examples of service departments include personnel, legal, and corporate accounting.

Costs are accumulated in traditional and ABC systems by .

If the vast majority of costs were directly traceable, then cost allocation would be a minor issue.

The two methods for allocating interdepartmental service costs are the:

Costs allocated as budget unit rate times actual usage

Costs allocated as budgeted cost driver times total budgeted costs

Joint costs are incurred:

ABC systems focus on accumulating costs into key activities, rather than into organizational units.

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Flexible Budget and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Filters