Question 1

Which of the following is not one of the objectives of cost allocation?

Accepted Answer

A) Motivate managers to exert a high-level of effort. 
B) Provide useful departmental and product costs. 
C) Identify production constraints. 
D) Provide the right incentive for managers to make the right decisions. 
E) Provide an appropriate basis for performance evaluation. 
A) Motivate managers to exert a high-level of effort. 
B) Provide useful departmental and product costs. 
C) Identify production constraints. 
D) Provide the right incentive for managers to make the right decisions. 
E) Provide an appropriate basis for performance evaluation.

Question 2

The amount of joint costs allocated to product DBB-2 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $2,009,160. 
B) $286,500. 
C) $881,640. 
D) $667,345. 
E) $709,200. 
A) $2,009,160. 
B) $286,500. 
C) $881,640. 
D) $667,345. 
E) $709,200.

Question 3

An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes:

Accepted Answer

A) Ability-to-bear. 
B) Efficiency. 
C) Different costs for different purposes. 
D) Consistency. 
A) Ability-to-bear. 
B) Efficiency. 
C) Different costs for different purposes. 
D) Consistency.

Question 4

A key disincentive effect of departmental cost allocation can occur when:

Accepted Answer

A) allocated costs are less than external purchase costs. 
B) managers do not understand the incentives in the allocation base. 
C) the allocation base is actual usage. 
D) the allocation base is budgeted usage. 
E) the allocation base is greater than usage. 
A) allocated costs are less than external purchase costs. 
B) managers do not understand the incentives in the allocation base. 
C) the allocation base is actual usage. 
D) the allocation base is budgeted usage. 
E) the allocation base is greater than usage.

Question 5

The amount of joint costs allocated to product N using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $3,614. 
B) $4,688. 
C) $23,438. 
D) $33,434. 
E) $46,875. 
A) $3,614. 
B) $4,688. 
C) $23,438. 
D) $33,434. 
E) $46,875.

Question 6

An overhead cost that can be traced directly to either a service or production department:

Accepted Answer

A) Is called a "flow through" cost. 
B) Requires less allocation effort. 
C) Is charged directly to that department. 
D) Must be variable. 
E) Must be fixed. 
A) Is called a "flow through" cost. 
B) Requires less allocation effort. 
C) Is charged directly to that department. 
D) Must be variable. 
E) Must be fixed.

Question 7

"What's the big fuss about learning three different methods of cost allocation for joint products? The total cost doesn't change, and the real question that needs answering is whether to further process joint products or sell right away. Besides, our firm uses JIT inventory, so there aren't any ending inventories to cost."
Required:
Comment on these ideas.

Accepted Answer

Answer may vary
Feedback: There are good

Question 8

If a budgeted activity base is used as the base in cost allocation, each department's cost allocation will be predictable, and not influenced by the:

Accepted Answer

A) Actual total cost. 
B) Change in activity. 
C) Variations from budget. 
D) Errors in calculations. 
E) Actual usage in other departments. 
A) Actual total cost. 
B) Change in activity. 
C) Variations from budget. 
D) Errors in calculations. 
E) Actual usage in other departments.

Question 9

Relative sales value at split-off is used to allocate: Cost Beyond

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 10

The amount of joint costs allocated to product Z using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $14,333. 
B) $15,158. 
C) $18,624. 
D) $17,667. 
E) $32,454. 
A) $14,333. 
B) $15,158. 
C) $18,624. 
D) $17,667. 
E) $32,454.

Question 11

A concept which is commonly employed with allocation bases related to size is:

Accepted Answer

A) Cost shifting. 
B) Benefit received. 
C) Equity share. 
D) Cause and effect relationship. 
E) Ability to bear. 
A) Cost shifting. 
B) Benefit received. 
C) Equity share. 
D) Cause and effect relationship. 
E) Ability to bear.

Question 12

The amount of joint costs allocated to product DBB-2 using the sales value at split-off method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $939,240. 
B) $216,870. 
C) $447,120. 
D) $757,800. 
E) $2,213,640. 
A) $939,240. 
B) $216,870. 
C) $447,120. 
D) $757,800. 
E) $2,213,640.

Question 13

The total cost accumulated in the finishing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $1,000,125. 
B) $1,890,000. 
C) $689,875. 
D) $642,000. 
E) $923,000. 
A) $1,000,125. 
B) $1,890,000. 
C) $689,875. 
D) $642,000. 
E) $923,000.

Question 14

The amount of joint costs allocated to product M using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $3,614. 
B) $4,688. 
C) $23,438. 
D) $33,434. 
E) $46,875. 
A) $3,614. 
B) $4,688. 
C) $23,438. 
D) $33,434. 
E) $46,875.

Question 15

When significant differences exist in costs allocated to production departments, cost management should use what method to find a more accurate cost allocation?

Accepted Answer

A) Reciprocal method. 
B) Step method. 
C) Direct method. 
D) None of the above. 
A) Reciprocal method. 
B) Step method. 
C) Direct method. 
D) None of the above.

Question 16

Revenue methods of by-product cost allocation are justified on financial accounting concepts of:

Accepted Answer

A) Revenue realization and materiality. 
B) Revenue realization, materiality, and cost-benefit. 
C) Materiality and cost-benefit. 
D) Materiality and stable dollar. 
E) Cost-benefit and stable dollar. 
A) Revenue realization and materiality. 
B) Revenue realization, materiality, and cost-benefit. 
C) Materiality and cost-benefit. 
D) Materiality and stable dollar. 
E) Cost-benefit and stable dollar.

Question 17

Cost allocation provides a service firm a basis for evaluating the:

Accepted Answer

A) Cost and profitability of its services. 
B) Value of its services. 
C) Manufacturing costs for the company. 
D) Profitability of its customers. 
A) Cost and profitability of its services. 
B) Value of its services. 
C) Manufacturing costs for the company. 
D) Profitability of its customers.

Question 18

By-product costing that uses the asset recognition method(s) creates:

Accepted Answer

A) Expense recognition in the current period. 
B) A distortion of net income. 
C) An adjustment on the income statement. 
D) An inventory value in the period in which the by-products are produced. 
E) A result that is not compatible with GAAP. 
A) Expense recognition in the current period. 
B) A distortion of net income. 
C) An adjustment on the income statement. 
D) An inventory value in the period in which the by-products are produced. 
E) A result that is not compatible with GAAP.

Question 19

The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Accepted Answer

A) $2,009,160. 
B) $286,500. 
C) $881,640. 
D) $667,345. 
E) $709,200. 
A) $2,009,160. 
B) $286,500. 
C) $881,640. 
D) $667,345. 
E) $709,200.

Question 20

Stulce Inc. produces joint products A, B, and C from a joint process. Information concerning a batch produced in May at a joint cost of $120,000 was as follows:   Required(calculate all ratios, percentages, and unit costs to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):
1. Allocate the joint costs to the joint products using the physical measures method.
2. Calculate the gross margin for each of the three products using the cost allocation for the physical unit method in part (1) above.
3. Allocate the joint costs to the joint products using the net realizable method.
4. Calculate the gross margin for each of the three products using the cost allocation for the net realizable value method in part (3) above.

Accepted Answer

Answer may vary
Feed

Which of the following is not one of the objectives of cost allocation?

The amount of joint costs allocated to product DBB-2 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes:

A key disincentive effect of departmental cost allocation can occur when:

The amount of joint costs allocated to product N using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

An overhead cost that can be traced directly to either a service or production department:

If a budgeted activity base is used as the base in cost allocation, each department's cost allocation will be predictable, and not influenced by the:

Relative sales value at split-off is used to allocate: Cost Beyond

The amount of joint costs allocated to product Z using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

A concept which is commonly employed with allocation bases related to size is:

The amount of joint costs allocated to product DBB-2 using the sales value at split-off method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

The total cost accumulated in the finishing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The amount of joint costs allocated to product M using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

When significant differences exist in costs allocated to production departments, cost management should use what method to find a more accurate cost allocation?

Revenue methods of by-product cost allocation are justified on financial accounting concepts of:

Cost allocation provides a service firm a basis for evaluating the:

By-product costing that uses the asset recognition method(s) creates:

The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

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Exam 7: Cost Allocation: Departments, Joint Products, and By-Products

Which of the following is not one of the objectives of cost allocation?

The amount of joint costs allocated to product DBB-2 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes:

A key disincentive effect of departmental cost allocation can occur when:

The amount of joint costs allocated to product N using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

An overhead cost that can be traced directly to either a service or production department:

If a budgeted activity base is used as the base in cost allocation, each department's cost allocation will be predictable, and not influenced by the:

Relative sales value at split-off is used to allocate: Cost Beyond

The amount of joint costs allocated to product Z using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

A concept which is commonly employed with allocation bases related to size is:

The amount of joint costs allocated to product DBB-2 using the sales value at split-off method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

The total cost accumulated in the finishing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

The amount of joint costs allocated to product M using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

When significant differences exist in costs allocated to production departments, cost management should use what method to find a more accurate cost allocation?

Revenue methods of by-product cost allocation are justified on financial accounting concepts of:

Cost allocation provides a service firm a basis for evaluating the:

By-product costing that uses the asset recognition method(s) creates:

The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Cost Management and Strategy

Implementing Strategy: the Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters