Exam 4: Cost Accumulation,Tracing,and Allocation

All of the following are examples of indirect costs that can be classified as being variable costs except:

Which of the following statements is

Which of the following is not a step in allocating indirect costs to cost objects?

Danforth Manufacturing Company uses a cost-plus pricing strategy.At the beginning of the year,Danforth estimated that total annual fixed overhead costs would amount to $60,000.Further,Danforth estimated that the annual volume of production would be 1,000 units of product.Based on these estimates,Danforth computed a predetermined overhead rate that was used to allocate overhead cost to the products made throughout the year.As predicted,the actual volume of production amounted to 1,000 units of product.However,actual fixed overhead costs amounted to $56,000.Based on this information alone:

Wayne Company wishes to allocate overhead costs in a heavily automated production department.Direct labor hours would be a less appropriate cost driver than machine hours.

For a manufacturer,measures of volume may include:

Both direct and indirect costs can be relevant to a particular decision.

Indicate whether each of the following statements is

The following information was gathered for Company J,a manufacturing company with three departments,A,B,and C: Manufacturing supplies cost is expected to be $300,000.Possible cost drivers are direct labor hours,direct materials cost,and number of units completed and sold.The three departments have varying amounts for these items. Department A Department B Department C Direct labor hours 15,000 40,000 45,000 Direct materials cost \ 500,000 \ 2,500,000 \ 2,000,000 \# of units expected to be completed and sold 80,000 30,000 40,000 Based on this information,indicate whether each of the following statements is

What cost driver would you use to allocate indirect materials to products?

The method used to allocate service department costs can cause overstatement of costs for some cost objects and understatement for others.

What is the object of allocating fixed overhead costs to products?

Indicate whether each of the following statements is

In an organization,departments that provide support to operating departments are called:

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Which of the following statements is

The split-off point is the point at which individual products resulting from a joint process can be identified.

Old Virginia Meat Processing Plant processes hogs to produce three joint products: bacon,sausage,and pork chops.The company incurs common processing costs of $100,000 per batch.Each batch yields 15,000 pounds of bacon,18,000 pounds of sausage,and 7,000 pounds of pork chops.Pork chops can be sold for $3.00 per pound.The bacon and sausage products are sold at the split-off point for $3.25 per pound and $3.50 per pound,respectively. Required: 1)Allocate Old Virginia's joint costs using pounds produced as the allocation base.(Do not round your intermediate calculations. ) 2)Allocate Old Virginia's joint costs using the relative sales value at split-off method.(Do not round your intermediate calculations. ) 3)Assume that the pork chops are processed further after the split-off point at an additional cost of $4,000 and that joint costs are allocated based on pounds produced.What would be the total cost assigned to pork chops?

Which formula best represents the first step used to allocate an indirect cost to a cost object?

Joint products A and B emerge from common processing that costs $200,000 and yields 2,000 units of Product A and 1,000 units of Product B.Product A can be sold for $100 per unit.Product B can be sold for $120 per unit.How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values? (Do not round your intermediate calculations. )