Question 1

Cubic feet are the logical cost driver for depreciation expense from heating and air conditioning equipment.

Accepted Answer

A) True 
 B)False

Question 2

Pepcid is a fast-food restaurant that sells two menu items.Corporate support costs are $50,000 per month.The owner of the restaurant wants the corporate support costs allocated to the two menu items.The following data is available:
   Required:
Compute the corporate support costs allocated to the two menu items if the preferred cost allocation base is used.

Accepted Answer

Menu Item 1: $50,000

Question 3

For costs that accountants cannot directly trace to products or services,accountants use ________ or ________.

Accepted Answer

A) cost-allocation methods; leave costs unallocated 
B) cost-budgeting methods; ignore remaining costs 
C) sensitivity analysis; financial planning models 
D) financial planning models; post-audits 
A) cost-allocation methods; leave costs unallocated 
B) cost-budgeting methods; ignore remaining costs 
C) sensitivity analysis; financial planning models 
D) financial planning models; post-audits

Question 4

Coyote Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Coyote Company plans to produce 40,000 pounds of Product C and 20,000 pounds of Product U from 60,000 pounds of ore.Product C sells for $30 per pound and Product U sells for $40 per pound.Assume the company uses the relative-sales-value method of allocating joint costs.What amount of joint costs is allocated to Product U?

Accepted Answer

A) $0 
B) $400,000 
C) $480,000 
D) $685,714 
A) $0 
B) $400,000 
C) $480,000 
D) $685,714

Question 5

Activity-based costing systems focus on accumulating costs into key activities instead of departments.

Accepted Answer

A) True 
 B)False

Question 6

Murphy Company has two service departments,Maintenance and Personnel.Murphy Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:   Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.What is the amount of costs allocated from the Personnel Department to the Mixing Department?

Accepted Answer

A) $29,746 
B) $31,500 
C) $58,500 
D) $63,000 
A) $29,746 
B) $31,500 
C) $58,500 
D) $63,000

Question 7

Colts Company manufactures three products from a joint process.Joint costs for the year amount to $500,000.The following data are available:   In addition,the following weights were available:
  Required:
Using the relative-sales-value method,determine the amount of joint costs allocated to each product.

Accepted Answer

A: 30/80 X $500,000

Question 8

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

Accepted Answer

A) True 
 B)False

Question 9

Seahawks Company has two service departments,Maintenance and Cafeteria,as well as two production departments,Mixing and Bottling.Maintenance Department costs are allocated based on square footage and Cafeteria Department costs are allocated based on number of employees.The following data was available:
   Assume the direct method is used to allocate service department costs to producing departments.
Required: 
A)Determine the total costs of the Mixing Department after allocating the service departments' costs.
B)Determine the total costs of the Bottling Department after allocating the service departments' costs.

Accepted Answer

The answer of Seahawks Company has two service departments,Maintenance and...

Question 10

Under the traditional approach to cost allocation,the costs in each cost pool are allocated to a product in proportion to the product's usage of the ________.

Accepted Answer

A) available capacity 
B) budgeted capacity 
C) cost-allocation base 
D) step down method 
A) available capacity 
B) budgeted capacity 
C) cost-allocation base 
D) step down method

Question 11

Alleluia Company has two service departments,Maintenance and Personnel.Alleluia Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:   If the direct method is used to allocate service department costs,then the cost allocated from the Maintenance Department to the Mixing Department is ________.

Accepted Answer

A) $20,160 
B) $25,200 
C) $28,800 
D) $50,400 
A) $20,160 
B) $25,200 
C) $28,800 
D) $50,400

Question 12

Robin Company manufactures three products from a joint process.Joint costs for the year amounted to $300,000.The following data was available:   Assume the physical-units method of allocating joint costs is used.What amount of joint costs is allocated to Product X?

Accepted Answer

A) $70,000 
B) $87,500 
C) $150,000 
D) $300,000 
A) $70,000 
B) $87,500 
C) $150,000 
D) $300,000

Question 13

Companies routinely allocate joint product costs to products for purposes of ________.

Accepted Answer

A) inventory valuation 
B) income determination 
C) decision-making such as further processing of joint products 
D) inventory valuation and income determination 
A) inventory valuation 
B) income determination 
C) decision-making such as further processing of joint products 
D) inventory valuation and income determination

Question 14

Gomez Company has two service departments,Maintenance and Personnel.Gomez Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:   If the step-down method is used to allocate service department costs,and the Maintenance Department is allocated first,the amount of costs allocated from the Maintenance Department to the Mixing Department is ________.

Accepted Answer

A) $36,000 
B) $42,000 
C) $42,750 
D) $63,000 
A) $36,000 
B) $42,000 
C) $42,750 
D) $63,000

Question 15

The traditional approach to cost allocation focuses on accumulating and reporting costs by ________.The activity-based approach to cost allocation focuses on accumulating and reporting costs by ________.

Accepted Answer

A) cost behavior; resources used 
B) departments; activities 
C) fixed costs; variable costs 
D) product; customer 
A) cost behavior; resources used 
B) departments; activities 
C) fixed costs; variable costs 
D) product; customer

Question 16

Robert Company's power plant provides electricity to two producing departments.The annual budget for the power plant shows the following:
   Actual annual costs incurred by the power plant were:
   Additional annual data follows:
   Required: 
A)Compute the amount of fixed costs allocated to each producing department.
B)Compute the amount of variable costs allocated to each producing department.

Accepted Answer

A)$250,000/$400,000 x $500,000 = $312,50

Question 17

The relative-sales-value method of allocating joint costs requires a common physical unit for measuring the output of each product.

Accepted Answer

A) True 
 B)False

Question 18

Wolf Company processes copper ore into two products,C and U.The ore costs $5 per pound and conversion costs are $15 per pound.Wolf Company plans to produce 40,000 pounds of Product C and 20,000 pounds of Product U from 60,000 pounds of ore.Product C sells for $30 per pound and Product U sells for $40 per pound.Assume the company uses the relative-sales-value method of allocating joint costs.What amount of joint costs is allocated to Product C?

Accepted Answer

A) $400,000 
B) $514,286 
C) $720,000 
D) $800,000 
A) $400,000 
B) $514,286 
C) $720,000 
D) $800,000

Question 19

The preferred cost allocation base for central corporate support costs is ________.

Accepted Answer

A) sales 
B) cost of goods sold 
C) total assets 
D) usage 
A) sales 
B) cost of goods sold 
C) total assets 
D) usage

Question 20

Aguia Company has two service departments,Maintenance and Personnel.Aguia Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees.The following information has been gathered for the current year:   Assume the step-down method is used to allocate service department costs and the Personnel Department is allocated first.Then the cost allocated from the Personnel Department to the Maintenance Department is ________.

Accepted Answer

A) $0 
B) $3,539 
C) $4,200 
D) $13,440 
A) $0 
B) $3,539 
C) $4,200 
D) $13,440

Cubic feet are the logical cost driver for depreciation expense from heating and air conditioning equipment.

For costs that accountants cannot directly trace to products or services,accountants use or .

Activity-based costing systems focus on accumulating costs into key activities instead of departments.

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

Under the traditional approach to cost allocation,the costs in each cost pool are allocated to a product in proportion to the product's usage of the ________.

Robin Company manufactures three products from a joint process.Joint costs for the year amounted to $300,000.The following data was available: Assume the physical-units method of allocating joint costs is used.What amount of joint costs is allocated to Product X?

Companies routinely allocate joint product costs to products for purposes of ________.

The traditional approach to cost allocation focuses on accumulating and reporting costs by .The activity-based approach to cost allocation focuses on accumulating and reporting costs by .

The relative-sales-value method of allocating joint costs requires a common physical unit for measuring the output of each product.

The preferred cost allocation base for central corporate support costs is ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 12: Cost Allocation

Cubic feet are the logical cost driver for depreciation expense from heating and air conditioning equipment.

For costs that accountants cannot directly trace to products or services,accountants use ________ or ________.

Activity-based costing systems focus on accumulating costs into key activities instead of departments.

The use of actual cost rates for allocating variable costs of service departments protects the user departments from intervening price fluctuations.

Under the traditional approach to cost allocation,the costs in each cost pool are allocated to a product in proportion to the product's usage of the ________.

Robin Company manufactures three products from a joint process.Joint costs for the year amounted to $300,000.The following data was available: Assume the physical-units method of allocating joint costs is used.What amount of joint costs is allocated to Product X?

Companies routinely allocate joint product costs to products for purposes of ________.

The traditional approach to cost allocation focuses on accumulating and reporting costs by ________.The activity-based approach to cost allocation focuses on accumulating and reporting costs by ________.

The relative-sales-value method of allocating joint costs requires a common physical unit for measuring the output of each product.

The preferred cost allocation base for central corporate support costs is ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

For costs that accountants cannot directly trace to products or services,accountants use or .

The traditional approach to cost allocation focuses on accumulating and reporting costs by .The activity-based approach to cost allocation focuses on accumulating and reporting costs by .