Question 1

Select the

Accepted Answer

A)  Only direct costs are traced to cost objects. 
B)  The same cost may be assigned to more than one cost object. 
C)  General,selling,and administrative costs cannot be assigned to a cost object. 
D)  A given cost can be driven by more than one cost driver. 
A)  Only direct costs are traced to cost objects. 
B)  The same cost may be assigned to more than one cost object. 
C)  General,selling,and administrative costs cannot be assigned to a cost object. 
D)  A given cost can be driven by more than one cost driver.

Question 2

Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?

Accepted Answer

A)  Number of employees 
B)  Number of customers 
C)  Square footage of office space 
D)  Either number of employees or square footage of office space depending on the nature of the indirect cost 
A)  Number of employees 
B)  Number of customers 
C)  Square footage of office space 
D)  Either number of employees or square footage of office space depending on the nature of the indirect cost

Question 3

The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:

Accepted Answer

A)  direct method. 
B)  indirect method. 
C)  weighted average method. 
D)  step method. 
A)  direct method. 
B)  indirect method. 
C)  weighted average method. 
D)  step method.

Question 4

Inaccurate allocation of joint costs to the individual products could cause an unprofitable product to appear to be profitable.

Accepted Answer

A) True 
 B)False

Question 5

How a particular cost behaves (fixed versus variable)is dependent of whether the cost is classified as direct or indirect.

Accepted Answer

A) True 
 B)False

Question 6

Once indirect costs are pooled,they must remain pooled for all allocations.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following regarding direct costs is a correct statement?

Accepted Answer

A)  Direct costs are always fixed costs. 
B)  Direct costs are always variable costs. 
C)  Direct costs are easily traced to cost objects. 
D)  Direct costs are never selling and administrative expenses. 
A)  Direct costs are always fixed costs. 
B)  Direct costs are always variable costs. 
C)  Direct costs are easily traced to cost objects. 
D)  Direct costs are never selling and administrative expenses.

Question 8

Which of the followings statements is correct regarding direct and indirect costs?

Accepted Answer

A)  Direct costs cannot easily be traced to a cost object,whereas indirect costs can be easily traced to a cost object. 
B)  Direct costs can be easily traced to a cost object,whereas indirect costs cannot be easily traced to a cost object. 
C)  Direct costs are always relevant to a particular cost decision,whereas indirect costs are never relevant to a cost decision. 
D)  Direct costs are never relevant to a particular cost decision,whereas indirect costs are always relevant to a cost decision. 
A)  Direct costs cannot easily be traced to a cost object,whereas indirect costs can be easily traced to a cost object. 
B)  Direct costs can be easily traced to a cost object,whereas indirect costs cannot be easily traced to a cost object. 
C)  Direct costs are always relevant to a particular cost decision,whereas indirect costs are never relevant to a cost decision. 
D)  Direct costs are never relevant to a particular cost decision,whereas indirect costs are always relevant to a cost decision.

Question 9

The primary advantage of establishing cost pools is reducing the number of individual cost allocations that are made.

Accepted Answer

A) True 
 B)False

Question 10

Vanguard Company makes three products,M,N,and P,which come from a joint process.The joint costs for each batch of the products are: $80,000 for direct materials,$40,000 for direct labor,and $30,000 for indirect costs (overhead).Each batch produces 10,000 pounds of product M with a market value of $6 per pound;5,000 pounds of N with a market value of $12 per pound;and 9,000 pounds of P with a market value of $10 per pound.
Required:
1)Determine the total amount of joint cost allocated to each of the products,assuming that the allocation is based on the weight of products produced.(Do not round your intermediate calculations.Round each of your final answers to the nearest whole dollar. )2)Determine the total amount of joint cost allocated to each of the products,assuming that the allocation is based on the market value of the products.(Do not round your intermediate calculations.Round each of your final answers to the nearest whole dollar. )

Accepted Answer

1)Total quantity = 10,000 + 5,000 + 9,00

Question 11

Select the incorrect statement from the following.

Accepted Answer

A)  The difference between a direct cost and an indirect cost is that a direct cost relates to a given cost object while an indirect cost does not. 
B)  Actual costs are useful for evaluating managerial performance. 
C)  Actual costs are not relevant in many decisions because actual costs cannot be determined until after the decision has been made. 
D)  When accumulating the cost of a specific cost object,the indirect costs are allocated to the cost object. 
A)  The difference between a direct cost and an indirect cost is that a direct cost relates to a given cost object while an indirect cost does not. 
B)  Actual costs are useful for evaluating managerial performance. 
C)  Actual costs are not relevant in many decisions because actual costs cannot be determined until after the decision has been made. 
D)  When accumulating the cost of a specific cost object,the indirect costs are allocated to the cost object.

Question 12

During the current year,Kemp Cons

Accepted Answer

A)  Number of homes built during the month. 
B)  Number of months in the year. 
C)  Number of homes built during the year. 
D)  Size of the home. 
A)  Number of homes built during the month. 
B)  Number of months in the year. 
C)  Number of homes built during the year. 
D)  Size of the home.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Blankenship Company operates a factory with two departments,X and Y.The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:

Accepted Answer

A)  Square footage occupied. 
B)  Machine hours. 
C)  Direct labor hours. 
D)  Units sold. 
A)  Square footage occupied. 
B)  Machine hours. 
C)  Direct labor hours. 
D)  Units sold.

Question 15

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the supervisory salaries be classified?

Accepted Answer

A)  Direct and variable 
B)  Direct and fixed 
C)  Indirect and variable 
D)  Indirect and fixed 
A)  Direct and variable 
B)  Direct and fixed 
C)  Indirect and variable 
D)  Indirect and fixed

Question 16

An allocation base has a cause-and-effect relationship with a cost object.

Accepted Answer

A) True 
 B)False

Question 17

Assume that factory depreciation for the year is $240,000.What problem could result from dividing that amount by 12 and assigning $20,000 in depreciation to the products made each month?

Accepted Answer

Answers will vary
Volume of pr

Question 18

At the beginning of the year,Barcroft Co.estimated that its total annual fixed overhead costs would amount to $25,000.Further,Barcroft estimated that its volume of production would be 2,000 units of product.Based on these estimates,Barcroft computed a predetermined overhead rate that was used to allocate overhead costs to the products made during the year.As predicted,actual fixed overhead costs did amount to $25,000.However,actual volume of production amounted to 2,200 units of product.Based on this information alone:

Accepted Answer

A)  Products were costed accurately during the year. 
B)  Products were overcosted during the year. 
C)  Products were undercosted during the year. 
D)  The answer cannot be determined from the information provided. 
A)  Products were costed accurately during the year. 
B)  Products were overcosted during the year. 
C)  Products were undercosted during the year. 
D)  The answer cannot be determined from the information provided.

Question 19

The goal in allocating a cost to cost objects is to achieve a rational allocation.

Accepted Answer

A) True 
 B)False

Question 20

Indicate whether each of the following statements is

Accepted Answer

Joint costs include materials,labor and

Select the

Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?

The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:

Inaccurate allocation of joint costs to the individual products could cause an unprofitable product to appear to be profitable.

How a particular cost behaves (fixed versus variable)is dependent of whether the cost is classified as direct or indirect.

Once indirect costs are pooled,they must remain pooled for all allocations.

Which of the following regarding direct costs is a correct statement?

Which of the followings statements is correct regarding direct and indirect costs?

The primary advantage of establishing cost pools is reducing the number of individual cost allocations that are made.

Select the incorrect statement from the following.

During the current year,Kemp Cons

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

Blankenship Company operates a factory with two departments,X and Y.The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the supervisory salaries be classified?

An allocation base has a cause-and-effect relationship with a cost object.

Assume that factory depreciation for the year is $240,000.What problem could result from dividing that amount by 12 and assigning $20,000 in depreciation to the products made each month?

The goal in allocating a cost to cost objects is to achieve a rational allocation.

Indicate whether each of the following statements is

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

Filters

Exam 4: Cost Accumulation,Tracing,and Allocation

Select the

Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?

The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:

Inaccurate allocation of joint costs to the individual products could cause an unprofitable product to appear to be profitable.

How a particular cost behaves (fixed versus variable)is dependent of whether the cost is classified as direct or indirect.

Once indirect costs are pooled,they must remain pooled for all allocations.

Which of the following regarding direct costs is a correct statement?

Which of the followings statements is correct regarding direct and indirect costs?

The primary advantage of establishing cost pools is reducing the number of individual cost allocations that are made.

Select the incorrect statement from the following.

During the current year,Kemp Cons

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

Blankenship Company operates a factory with two departments,X and Y.The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the supervisory salaries be classified?

An allocation base has a cause-and-effect relationship with a cost object.

Assume that factory depreciation for the year is $240,000.What problem could result from dividing that amount by 12 and assigning $20,000 in depreciation to the products made each month?

The goal in allocating a cost to cost objects is to achieve a rational allocation.

Indicate whether each of the following statements is

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

Filters