Question 1

Maintenance is an example of a service department.

Accepted Answer

A) True 
 B)False

Question 2

Activity-based accounting systems classify more costs as direct, thus simplifying and reducing the cost of a traditional system.

Accepted Answer

A) True 
 B)False

Question 3

Bare Company manufactures four products from a joint process. Joint costs for the year amounted to $140,000. The following data are also available:
  
-Assuming the relative-sales-value method of allocating joint costs, the amount of joint costs allocated to product R would be

Accepted Answer

A)  $49,000.00. 
B)  $39,760.00. 
C)  $69,014.40. 
D)  $22,720.00. 
A)  $49,000.00. 
B)  $39,760.00. 
C)  $69,014.40. 
D)  $22,720.00.

Question 4

The preferred guidelines for allocating service department costs include all of the following EXCEPT

Accepted Answer

A)  identify the direct and indirect costs. 
B)  evaluate performance using budgets for each service department. 
C)  establish part or all of the details regarding cost allocation in advance of rendering the service. 
D)  allocate variable- and fixed-cost pools separately. 
A)  identify the direct and indirect costs. 
B)  evaluate performance using budgets for each service department. 
C)  establish part or all of the details regarding cost allocation in advance of rendering the service. 
D)  allocate variable- and fixed-cost pools separately.

Question 5

Henry Company has three support departments and two producing departments. Information for each department for 2006 is as follows:   Plant administration costs are allocated based on direct labour hours, plant maintenance costs are allocated based on square footage occupied, and plant cafeteria costs are allocated based on the number of employees.
The company does not divide overhead into fixed and variable components. Predetermined overhead rates for the producing departments are based on direct labour hours.
Allocate the support department costs using the direct method. Next calculate the predetermined overhead rates the producing departments would use to apply overhead to units of product.

Accepted Answer

The answer of Henry Company has three support departments and...

Question 6

Which of the following is NOT a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity?

Accepted Answer

A)  Activity-based accounting 
B)  Cost-driver accounting 
C)  Transaction-based accounting 
D)  Transaction costing 
A)  Activity-based accounting 
B)  Cost-driver accounting 
C)  Transaction-based accounting 
D)  Transaction costing

Question 7

John Gordan Company had the following activities, traceable costs, and physical flow of driver units:
   The above activities are used by departments A and B as follows:
  
-How much of the account inquiry cost will be assigned to Department A?

Accepted Answer

A)  $40,000 
B)  $200,000 
C)  $80,000 
D)  None of the above 
A)  $40,000 
B)  $200,000 
C)  $80,000 
D)  None of the above

Question 8

A method that simultaneously allocates service costs to all user departments. It gives full consideration to interactions among support departments.

Accepted Answer

Reciprocal

Question 9

There are three Easy Stay Inns, one in each of the following cities: Britton, Casey, and Sloop.
The central office provides computer services to each of the three motels. Information pertaining to the computer centre and the three motels follows.   a. Using the direct method, allocate the computer centre costs to each motel location to provide information for setting room rates.
b. Using the direct method, allocate the computer centre costs to each motel location assuming the purpose is to evaluate performance.
c. Did the total amount allocated in requirement (B) above differ from the amount of costs incurred by the computer centre?

Accepted Answer

a. @#IMG-DLM& b. @#IMG-DLM& c. Actual costs incurred by the

Question 10

Dorpinghaus Corp. manufactures two models of its telephones, a standard and a deluxe model. Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information:
  
-If activity-based costing is used, then the total cost of the components used in the deluxe model would be

Accepted Answer

A)  $3,455. 
B)  $110,545. 
C)  $193,455. 
D)  $304,000. 
A)  $3,455. 
B)  $110,545. 
C)  $193,455. 
D)  $304,000.

Question 11

Producing departments are responsible for producing the products sold to customers.

Accepted Answer

A) True 
 B)False

Question 12

Costs are allocated for all the following purposes EXCEPT to

Accepted Answer

A)  predict the economic effects of planning and control decisions. 
B)  obtain desired motivation. 
C)  determine the sales volume. 
D)  compute income and asset valuation. 
A)  predict the economic effects of planning and control decisions. 
B)  obtain desired motivation. 
C)  determine the sales volume. 
D)  compute income and asset valuation.

Question 13

Which of the following is NOT a type of cost allocation?

Accepted Answer

A)  Allocation of costs to the appropriate organizational unit 
B)  Reallocation of costs from service departments to production departments 
C)  Allocation of costs of a particular organizational unit to products or services 
D)  Reallocation of costs from production departments to service departments 
A)  Allocation of costs to the appropriate organizational unit 
B)  Reallocation of costs from service departments to production departments 
C)  Allocation of costs of a particular organizational unit to products or services 
D)  Reallocation of costs from production departments to service departments

Question 14

Which of the following is NOT an example of a non-value-added cost?

Accepted Answer

A)  Receiving inventory 
B)  Transporting work-in-process 
C)  Warehousing inventory 
D)  Assembling raw materials 
A)  Receiving inventory 
B)  Transporting work-in-process 
C)  Warehousing inventory 
D)  Assembling raw materials

Question 15

A method of allocating service costs that ignores any interactions that may exist among support departments.

Accepted Answer

The answer of A method of allocating service costs that...

Question 16

One of the main objectives of cost allocation is to motivate managers.

Accepted Answer

A) True 
 B)False

Question 17

The direct method of allocating service department costs partially recognizes services that service departments provide to each other.

Accepted Answer

A) True 
 B)False

Question 18

Stumbo Company has two production departments, Cutting and Assembling, served by one maintenance department. Budgeted fixed costs for the maintenance department for 20X3 were $60,000, and the variable cost per labour hour was $2.00. Other relevant data for 20X3 are as follows:
   Actual maintenance department costs for 20X3 were $64,000 fixed and $120,000 variable.
S1U1P1*S1S1P0in labour hours
-The amount of fixed maintenance costs allocated to the Cutting Department should be

Accepted Answer

A)  $40,000. 
B)  $24,000. 
C)  $36,000. 
D)  $28,000. 
A)  $40,000. 
B)  $24,000. 
C)  $36,000. 
D)  $28,000.

Question 19

Stohr Company has two departments, New and Old. Central costs are allocated to the two departments in various ways. Relevant information is presented below:
  
-If total advertising expense is $240,000 and it is allocated on the basis of sales, the amount allocated to the New Department should be

Accepted Answer

A)  $40,000. 
B)  $60,000. 
C)  $168,000. 
D)  $200,000. 
A)  $40,000. 
B)  $60,000. 
C)  $168,000. 
D)  $200,000.

Question 20

John Gordan Company had the following activities, traceable costs, and physical flow of driver units:
   The above activities are used by departments A and B as follows:
  
-What is the cost per driver unit for the account inquiry activity?

Accepted Answer

A)  $40.00 
B)  $0.07 
C)  $3.75 
D)  $12.50 
A)  $40.00 
B)  $0.07 
C)  $3.75 
D)  $12.50

Maintenance is an example of a service department.

Activity-based accounting systems classify more costs as direct, thus simplifying and reducing the cost of a traditional system.

Bare Company manufactures four products from a joint process. Joint costs for the year amounted to $140,000. The following data are also available: -Assuming the relative-sales-value method of allocating joint costs, the amount of joint costs allocated to product R would be

The preferred guidelines for allocating service department costs include all of the following EXCEPT

Which of the following is NOT a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity?

John Gordan Company had the following activities, traceable costs, and physical flow of driver units: The above activities are used by departments A and B as follows: -How much of the account inquiry cost will be assigned to Department A?

A method that simultaneously allocates service costs to all user departments. It gives full consideration to interactions among support departments.

Producing departments are responsible for producing the products sold to customers.

Costs are allocated for all the following purposes EXCEPT to

Which of the following is NOT a type of cost allocation?

Which of the following is NOT an example of a non-value-added cost?

A method of allocating service costs that ignores any interactions that may exist among support departments.

One of the main objectives of cost allocation is to motivate managers.

The direct method of allocating service department costs partially recognizes services that service departments provide to each other.

Stohr Company has two departments, New and Old. Central costs are allocated to the two departments in various ways. Relevant information is presented below: -If total advertising expense is $240,000 and it is allocated on the basis of sales, the amount allocated to the New Department should be

John Gordan Company had the following activities, traceable costs, and physical flow of driver units: The above activities are used by departments A and B as follows: -What is the cost per driver unit for the account inquiry activity?

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Measurement of Cost Behaviour

Cost Management Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

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Exam 5: Cost Allocation and Activity-Based Costing Systems

Maintenance is an example of a service department.

Activity-based accounting systems classify more costs as direct, thus simplifying and reducing the cost of a traditional system.

Bare Company manufactures four products from a joint process. Joint costs for the year amounted to $140,000. The following data are also available: -Assuming the relative-sales-value method of allocating joint costs, the amount of joint costs allocated to product R would be

The preferred guidelines for allocating service department costs include all of the following EXCEPT

Which of the following is NOT a name for a system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity?

John Gordan Company had the following activities, traceable costs, and physical flow of driver units: The above activities are used by departments A and B as follows: -How much of the account inquiry cost will be assigned to Department A?

A method that simultaneously allocates service costs to all user departments. It gives full consideration to interactions among support departments.

Producing departments are responsible for producing the products sold to customers.

Costs are allocated for all the following purposes EXCEPT to

Which of the following is NOT a type of cost allocation?

Which of the following is NOT an example of a non-value-added cost?

A method of allocating service costs that ignores any interactions that may exist among support departments.

One of the main objectives of cost allocation is to motivate managers.

The direct method of allocating service department costs partially recognizes services that service departments provide to each other.

Stohr Company has two departments, New and Old. Central costs are allocated to the two departments in various ways. Relevant information is presented below: -If total advertising expense is $240,000 and it is allocated on the basis of sales, the amount allocated to the New Department should be

John Gordan Company had the following activities, traceable costs, and physical flow of driver units: The above activities are used by departments A and B as follows: -What is the cost per driver unit for the account inquiry activity?

Management Accounting and Management Decisions

Cost Behaviour and Cost-Volume Relationships

Measurement of Cost Behaviour

Cost Management Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

Filters