Marsden Company has three departments occupying the following amount of floor space: $\begin{array}{|l|l|} \hline \text { Department 1 } & 15,000 \mathrm{sq.ft} \\ \hline \text { Department 2 } & 10,000 \mathrm{sq.ft} \\ \hline \text { Department 3 } & 25,000 \mathrm{sq.ft} \\ \hline \end{array}$ How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round your intermediate calculations. )

A) $100,000 B) $50,000 C) $66,667 D) None of the answers are correct. A) $100,000 B) $50,000 C) $66,667 D) None of the answers are correct.

Sheddon Industries produces two products.The products' identified costs are as follows: $\begin{array}{|l|c|l|} \hline & \text { Product A } & \text { Product B } \\ \hline \text { Direct matenals } & \$ 20,000 & \$ 15,000 \\ \hline \text { Direct labor } & 12,000 & 24,000 \\ \hline \end{array}$ The company's overhead costs of $108,000 are allocated based on direct labor cost.Assume 4,000 units of product A and 5,000 units of Product B are produced.What is the cost per unit for product B? (Do not round your intermediate calculations. )

A) $7.80 B) $22.20 C) $16.80 D) None of the answers are correct. A) $7.80 B) $22.20 C) $16.80 D) None of the answers are correct.

Alleghany Community College operates four departments.The square footage used by each department is shown below. $\begin{array}{|l|r|} \hline {\text { Department }} & \text { Square Footage } \\ \hline \text { Accounting } & 3,000 \\ \hline \text { Marketing } & 4,000 \\ \hline \text { Technology } & 6,000 \\ \hline \text { Sciences } & 3,00 0 \\ \hline {\text { Total }} & 16,000 \\ \hline \end{array}$ Alleghany's annual building rental cost is $320,000 What amount of rent expense that should be allocated to the Sciences Department?

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

Anchor Calendar Company manufactures wall and desktop calendars for business use.The company expects production of 20,000 units this year.Various costs and items associated with calendar production are described below: \[\begin{array} { | l | l | l | l | l | } \hline \text { Item } & \text { Direct } & \text { Indirect } & \text { Fised } & \text { Variable } \\ \hline \text { Purchase cost of paper } & & & & \\ \hline \text { Assembly labor costs } & & & & \\ \hline \text { Supervisory labor costs } & & & & \\ \hline \begin{array} { l } \text { Depreciation on paper cutting } \\ \text { machines } \end{array} & & & & \\ \hline \text { Depreciation on factory building } & & & & \\ \hline \begin{array} { l } \text { Maintenance on machines } \\ \text { (performed between batches of } \\ \text { products) } \end{array} & & & & \\ \hline \begin{array} { l } \text { Materials used in small amount, } \\ \text { such as glue } \end{array} & & & & \\ \hline \text { Factory rental costs } & & & & \\ \hline \end{array}\] Required: Assume that management is interested in determining the average cost per calendar.For each item in the table,place a check mark or X in every column that applies.When labeling costs as fixed or variable,select your response on the basis of whether the total cost of that item will change when changes occur in volume of calendars produced.

\[\begin{array} { | l | l | l | l | l |

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: Total Miles Traveled: $\begin{array}{|l|l|} \hline \text { Western Division } & 800,000 \text { miles } \\ \hline \text { Pacific Division } & 1,200,000 \text { miles } \\ \hline \end{array}$ The amount of track improvement cost that should be allocated to the Western Division is: (Do not round your intermediate calculations. )

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.

Exam 4: Cost Accumulation,Tracing,and Allocation

Burke Company has 160 employees,88 of whom are in Department 1 and 72 in Department 2.The company expects to incur $166,000 of office supplies costs during the current year.How much of this cost should be allocated to Department 1?

(Essay)

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Question 21

Marsden Company has three departments occupying the following amount of floor space: Department 1 15,000 Department 2 10,000 Department 3 25,000 How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round your intermediate calculations. )

(Multiple Choice)

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Question 22

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

(True/False)

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Question 23

A company's total profit can be affected by the method used to allocate joint costs.

(True/False)

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Question 24

A company may use several different cost drivers to allocate its indirect costs.

(True/False)

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Question 25

Sheddon Industries produces two products.The products' identified costs are as follows: Product A Product B Direct matenals \ 20,000 \ 15,000 Direct labor 12,000 24,000 The company's overhead costs of $108,000 are allocated based on direct labor cost.Assume 4,000 units of product A and 5,000 units of Product B are produced.What is the cost per unit for product B? (Do not round your intermediate calculations. )

(Multiple Choice)

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Question 26

For financial reporting,joint costs are assigned to the product with the highest sales value.

(True/False)

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Question 27

To avoid the appearance that a joint product is incurring losses,a company might allocate joint costs based on relative sales value of each product at the split-off point.

(True/False)

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Question 28

The first step in cost accumulation is to identify cost objects.

(True/False)

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Question 29

The accuracy of managerial accounting information usually is more important than timeliness.

(True/False)

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Question 30

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

(Multiple Choice)

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Question 31

Anchor Calendar Company manufactures wall and desktop calendars for business use.The company expects production of 20,000 units this year.Various costs and items associated with calendar production are described below: Item Direct Indirect Fised Variable Purchase cost of paper Assembly labor costs Supervisory labor costs Depreciation on paper cutting machines Depreciation on factory building Maintenance on machines (performed between batches of products) Materials used in small amount, such as glue Factory rental costs Required: Assume that management is interested in determining the average cost per calendar.For each item in the table,place a check mark or X in every column that applies.When labeling costs as fixed or variable,select your response on the basis of whether the total cost of that item will change when changes occur in volume of calendars produced.

(Essay)

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Question 32

Why is a company's selection of cost allocation methods important to individual managers?

(Essay)

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Question 33

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

(True/False)

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Question 34

Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following should not be treated as direct costs,assuming the cost object is individual clocks?

(Multiple Choice)

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Question 35

In a manufacturing company,service department costs are:

(Multiple Choice)

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Question 36

At the beginning of the year,Rangle Company expected to incur $54,000 of overhead costs in producing 6,000 units of product.The direct material cost is $20 per unit of product.Direct labor cost is $30 per unit.During January,600 units were produced.The total cost of the units made in January was:

(Multiple Choice)

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Question 37

Each indirect cost should be allocated to products individually to provide the most useful cost information.

(True/False)

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Question 38

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: Total Miles Traveled: Western Division 800,000 miles Pacific Division 1,200,000 miles The amount of track improvement cost that should be allocated to the Western Division is: (Do not round your intermediate calculations. )

(Multiple Choice)

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Question 39

How can the use of a predetermined overhead rate prevent timing problems in determining the costs of products?

(Essay)

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Question 40

Burke Company has 160 employees,88 of whom are in Department 1 and 72 in Department 2.The company expects to incur $166,000 of office supplies costs during the current year.How much of this cost should be allocated to Department 1?

Marsden Company has three departments occupying the following amount of floor space: Department 1 15,000 Department 2 10,000 Department 3 25,000 How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round your intermediate calculations. )

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

A company's total profit can be affected by the method used to allocate joint costs.

A company may use several different cost drivers to allocate its indirect costs.

For financial reporting,joint costs are assigned to the product with the highest sales value.

To avoid the appearance that a joint product is incurring losses,a company might allocate joint costs based on relative sales value of each product at the split-off point.

The first step in cost accumulation is to identify cost objects.

The accuracy of managerial accounting information usually is more important than timeliness.

Why is a company's selection of cost allocation methods important to individual managers?

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following should not be treated as direct costs,assuming the cost object is individual clocks?

In a manufacturing company,service department costs are:

At the beginning of the year,Rangle Company expected to incur $54,000 of overhead costs in producing 6,000 units of product.The direct material cost is $20 per unit of product.Direct labor cost is $30 per unit.During January,600 units were produced.The total cost of the units made in January was:

Each indirect cost should be allocated to products individually to provide the most useful cost information.

How can the use of a predetermined overhead rate prevent timing problems in determining the costs of products?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

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