Question 1

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

Accepted Answer

A) True 
 B)False

Question 2

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year. It is estimated that these employees move 600,000 pounds of material per year. If 60,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)

Accepted Answer

A)  $36,000 
B)  $24,000 
C)  $50,000 
D)  $38,000 
A)  $36,000 
B)  $24,000 
C)  $50,000 
D)  $38,000

Question 3

For a manufacturer, measures of volume may include:

Accepted Answer

A)  Number of units produced. 
B)  Number of square feet occupied. 
C)  Amount of direct materials used in production. 
D)  Both number of units produced and amount of direct materials used in production are correct. 
A)  Number of units produced. 
B)  Number of square feet occupied. 
C)  Amount of direct materials used in production. 
D)  Both number of units produced and amount of direct materials used in production are correct.

Question 4

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $189,000 a year. It is estimated that these employees move 690,000 pounds of material per year. If 69,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)

Accepted Answer

A)  $18,900 
B)  $12,900 
C)  $25,900 
D)  $19,900 
A)  $18,900 
B)  $12,900 
C)  $25,900 
D)  $19,900

Question 5

At the beginning of the year, Rangle Company expected to incur $63,000 of overhead costs in producing 6,300 units of product. The direct material cost is $29 per unit of product. Direct labor cost is $39 per unit. During January, 590 units were produced. The total cost of the units made in January was:

Accepted Answer

A)  $40,120 
B)  $5,900 
C)  $46,020 
D)  None of the answers are correct. 
A)  $40,120 
B)  $5,900 
C)  $46,020 
D)  None of the answers are correct.

Question 6

A cost pool should be made up of costs with a common cost object.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Accepted Answer

A)  The cost of heating and air-conditioning. 
B)  The cost of supplies. 
C)  The cost of the department manager's salary. 
D)  Rent on the store building. 
A)  The cost of heating and air-conditioning. 
B)  The cost of supplies. 
C)  The cost of the department manager's salary. 
D)  Rent on the store building.

Question 8

Sometimes, volume-based cost drivers are used to allocate fixed indirect costs.

Accepted Answer

A) True 
 B)False

Question 9

Jessup Company expects to incur overhead costs of $20,000 per month and direct production costs of $125 per unit. The estimated production activity for the upcoming year is 1,000 units. If the company desires to earn a gross profit of $50 per unit, the sales price per unit would be which of the following amounts?

Accepted Answer

A)  $175 
B)  $195 
C)  $415 
D)  $290 
A)  $175 
B)  $195 
C)  $415 
D)  $290

Question 10

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,000,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: $\text { Total Miles Traveled: }$
$\begin{array}{ll}
  \text {  Western Division } &800,000 \text { miles } \
  \text {Pacific Division  } &  1,200,000 \text { miles } \
\end{array}$
 The amount of track improvement cost that should be allocated to the Western Division is:

Accepted Answer

A)  $4,000,000. 
B)  $3,200,000. 
C)  $800,000. 
D)  $5,333,333. 
A)  $4,000,000. 
B)  $3,200,000. 
C)  $800,000. 
D)  $5,333,333.

Question 11

Assume that a factory seeks to allocate rent to several departments that occupy the factory. The factory is occupied by all of the departments. Which of the following is the most logical cost driver for allocating the factory rent?

Accepted Answer

A)  Number of employees 
B)  Square footage occupied by each department 
C)  Machine hours 
D)  Number of labor hours in each department 
A)  Number of employees 
B)  Square footage occupied by each department 
C)  Machine hours 
D)  Number of labor hours in each department

Question 12

Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis. At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated. Based on this information alone:

Accepted Answer

A)  The correct amount of cost was assigned to products during the accounting period. 
B)  Too much cost was assigned to products during the accounting period. 
C)  Too little cost was assigned to products during the accounting period. 
D)  The answer cannot be determined from the information provided. 
A)  The correct amount of cost was assigned to products during the accounting period. 
B)  Too much cost was assigned to products during the accounting period. 
C)  Too little cost was assigned to products during the accounting period. 
D)  The answer cannot be determined from the information provided.

Question 13

Alleghany Community College operates four departments. The square footage used by each department is shown below. $\begin{array}{lc}
\text { Department } & \text { Square Footage }\
\text { Accounting } & 3,000 \
\text { Marketing } & 4,000 \
\text { Technology } & 6,000 \
\text { Sciences } & \underline{3,000}\
\text {Total}&\underline{16,000}
\end{array}$ Alleghany's annual building rental cost is $320,000.
What amount of rent expense should be allocated to the Technology Department?

Accepted Answer

A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $192,000 
A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $192,000

Question 14

Cost accumulation is used to:

Accepted Answer

A)  Determine the cost of a particular cost object. 
B)  Identify and estimate opportunity costs. 
C)  Identify fixed and variable costs. 
D)  Set the selling price for a service. 
A)  Determine the cost of a particular cost object. 
B)  Identify and estimate opportunity costs. 
C)  Identify fixed and variable costs. 
D)  Set the selling price for a service.

Question 15

Sheddon Industries produces two products. The products' identified costs are as follows: $$\begin{array} { l c c } 
& \text { Product A } & \text { Product B } \
\text { Direct materials } & \$ 20,000 & \$ 15,000 \
\text { Direct labor } & 12,000 & 24,000
\end{array}$$ The company's overhead costs of $108,000 are allocated based on labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What amount of production costs would be assigned to Product A? (Do not round intermediate calculations.)

Accepted Answer

A)  $36,000 
B)  $111,000 
C)  $68,000 
D)  None of the answers are correct. 
A)  $36,000 
B)  $111,000 
C)  $68,000 
D)  None of the answers are correct.

Question 16

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Accepted Answer

A)  Direct costs only. 
B)  Both direct and indirect costs. 
C)  Neither direct nor indirect costs. 
D)  Indirect costs but not direct costs. 
A)  Direct costs only. 
B)  Both direct and indirect costs. 
C)  Neither direct nor indirect costs. 
D)  Indirect costs but not direct costs.

Question 17

Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

Accepted Answer

A)  It meets guidelines imposed by generally accepted accounting principles. 
B)  It can be traced to a division in a cost-effective manner. 
C)  It is a variable cost. 
D)  It can be allocated to a division. 
A)  It meets guidelines imposed by generally accepted accounting principles. 
B)  It can be traced to a division in a cost-effective manner. 
C)  It is a variable cost. 
D)  It can be allocated to a division.

Question 18

Alleghany Community College operates four departments. The square footage used by each department is shown below: $\begin{array}{lc}
\text { Department } & \text { Square Footage }\
\text { Accounting } & 3,000 \
\text { Marketing } & 4,000 \
\text { Technology } & 6,000 \
\text { Sciences } & \underline{3,000}\
\text {Total}&\underline{16,000}
\end{array}$ Alleghany's annual building rental cost is $320,000.
What amount of rent expense should be allocated to the Sciences Department?

Accepted Answer

A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $106,667 
A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $106,667

Question 19

Alleghany Community College operates four departments. The square footage used by each department is shown below. $\begin{array}{lc}
\text { Department }&\text {Square Footage }\
\text { Accounting } & 5,000 \
\text { Marketing } &6,000 \
\text { Technology } &8,000 \
\text { Sciences } &  \underline{5,000}\
\text { Total }& \underline{24,000}
\end{array}$ Alleghany's annual building rental cost is $270,000.What amount of rent expense should be allocated to the Sciences Department? (Do not round intermediate calculations.)

Accepted Answer

A)  $56,250 
B)  $67,500 
C)  $90,000 
D)  $270,000 
A)  $56,250 
B)  $67,500 
C)  $90,000 
D)  $270,000

Question 20

The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $126,000 at the beginning of the year was expected to deliver 126,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: $$\begin{array} { | l | c | c | c | c | } 
\hline \text { Construction Sites: } & \text { A } & \text { B } & \text { C } & \text { D } \
\hline \text { Tons Delivered: } & 1,000 & 2,500 & 3,000 & 500 \
\hline
\end{array}$$ How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

Accepted Answer

A)  $9,000 
B)  $1,260 
C)  $3,000 
D)  None of these answers are correct. 
A)  $9,000 
B)  $1,260 
C)  $3,000 
D)  None of these answers are correct.

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

For a manufacturer, measures of volume may include:

A cost pool should be made up of costs with a common cost object.

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Sometimes, volume-based cost drivers are used to allocate fixed indirect costs.

Assume that a factory seeks to allocate rent to several departments that occupy the factory. The factory is occupied by all of the departments. Which of the following is the most logical cost driver for allocating the factory rent?

Cost accumulation is used to:

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 12: Cost Accumulation, Tracing, and Allocation

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

For a manufacturer, measures of volume may include:

A cost pool should be made up of costs with a common cost object.

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Sometimes, volume-based cost drivers are used to allocate fixed indirect costs.

Assume that a factory seeks to allocate rent to several departments that occupy the factory. The factory is occupied by all of the departments. Which of the following is the most logical cost driver for allocating the factory rent?

Cost accumulation is used to:

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters