Exam 4: Cost Accumulation,Tracing,and Allocation

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

Cost allocation is the process of dividing a total cost into its fixed and variable components.

Which of the following costs generally can be traced directly to units of product?

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 wages of sewing machine operators be classified?

The direct method of allocating service department costs does not take into account the fact that service departments often provide assistance to other service departments.

Indirect costs should not be pooled unless they share a common cost driver.

Illustrate with examples how cost definitions are independent and context sensitive.In other words,indicate how a cost can be classified as fixed or variable and direct or indirect,depending on the situation.

Which of the following is not an example of a cost object and its related cost driver? Cost Obiect Cost Driver A. Rent Square feet B. Transportation Miles driven C. Direct labor hours Indirect labor D. Utilities Machine hours

Joint costs total $24,000 for a production process that yields two main products,A and A.B.If joint costs are allocated to the products on the basis of their respective $20,000 and $30,000 sales values,2/3 of the joint costs (or $16,000)would be allocated to Product

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Which of the following statements is

Which of the following is not a joint product with the other products listed?

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

Using the step method of allocating service department costs,the costs are allocated to:

Joint costs are irrelevant in a decision to sell a joint product at the split-off point or process it further.

What should a company consider when pooling indirect costs?

Indicate whether each of the following statements is

Dallas Company's human resources department provides training and other services to the company's three operating departments and to one service department.The assembly department has 75 employees;the finishing department has 15 employees;and the sales department has 10 employees.The service department to which human resources provides services is the maintenance department,which has 13 employees.The human resources department costs are allocated using the direct method and based on the number of employees,and the total amount of costs for the department is $150,000. Required: Determine the amount of human resources cost that should be allocated to each department.

Selection of a cost driver depends on:

A chair manufacturer makes custom chairs using hand tools,wood,glue,and varnish.Which of the following statements is