Question 1

The method that ranks individual products in a bundle for revenue allocation is the:

Accepted Answer

A) stand-alone revenue-allocation method 
B) incremental revenue-allocation method 
C) unit-cost weighting method 
D) physical-unit weighting method 
A) stand-alone revenue-allocation method 
B) incremental revenue-allocation method 
C) unit-cost weighting method 
D) physical-unit weighting method

Question 2

________ occurs where revenues, related but NOT traceable to individual products, are assigned to those individual products.

Accepted Answer

A) Revenue tracing 
B) Revenue allocation 
C) Stand-alone pricing 
D) Reciprocal pricing 
A) Revenue tracing 
B) Revenue allocation 
C) Stand-alone pricing 
D) Reciprocal pricing

Question 3

The practical capacity method of allocating costs is:

Accepted Answer

A) based on the budgeted capacity demanded. 
B) based on actual capacity used. 
C) based on the practical capacity supplied. 
D) based on the using departments negotiating the charges they will accept. 
A) based on the budgeted capacity demanded. 
B) based on actual capacity used. 
C) based on the practical capacity supplied. 
D) based on the using departments negotiating the charges they will accept.

Question 4

Answer the following questions using the information below:
The Charmatz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year:
Budgeted costs of operating the copying facility
for 400,000 to 600,000 copies:
   Budgeted long-run usage in copies per year:
   Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Marketing Department was 80,000 copies and by the Operations Department was 360,000 copies.
-If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department?

Accepted Answer

A) $18,000 
B) $3,600 
C) $14,400 
D) $16,800 
A) $18,000 
B) $3,600 
C) $14,400 
D) $16,800

Question 5

Answer the following questions using the information below:
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
  
-Using the direct method, what amount of Maintenance Department costs will be allocated to Department B?

Accepted Answer

A) $96,000 
B) $128,000 
C) $156,000 
D) $192,000 
A) $96,000 
B) $128,000 
C) $156,000 
D) $192,000

Question 6

The stand-alone method may use selling price or unit costs to allocate revenues.

Accepted Answer

A) True 
 B)False

Question 7

Contract disputes regarding cost allocation can be reduced by defining:

Accepted Answer

A) the cost items allowed 
B) the terms used, such as what constitutes direct labor 
C) permissible cost-allocation bases 
D) All of these answers are correct. 
A) the cost items allowed 
B) the terms used, such as what constitutes direct labor 
C) permissible cost-allocation bases 
D) All of these answers are correct.

Question 8

Cost-based prices:

Accepted Answer

A) are one way of setting prices in a competitive market 
B) provide an inherit incentive for the producer to control costs 
C) pass the majority of risk to the buyer 
D) are required in all government contracts 
A) are one way of setting prices in a competitive market 
B) provide an inherit incentive for the producer to control costs 
C) pass the majority of risk to the buyer 
D) are required in all government contracts

Question 9

Answer the following questions using the information below:
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
  
-Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Accepted Answer

A) $64,000 
B) $85,333 
C) $114,667 
D) $128,000 
A) $64,000 
B) $85,333 
C) $114,667 
D) $128,000

Question 10

________ is a cost that the contract parties agree to include in the costs to be reimbursed.

Accepted Answer

A) An allowable cost 
B) An unallowable cost 
C) An incremental cost 
D) A stand-alone cost 
A) An allowable cost 
B) An unallowable cost 
C) An incremental cost 
D) A stand-alone cost

Question 11

The direct allocation method allows for no recognition of services rendered by support departments to other support departments.

Accepted Answer

A) True 
 B)False

Question 12

Under the dual-rate cost-allocation method, when fixed costs are allocated based on actual usage then:

Accepted Answer

A) user-division managers are motivated to make accurate long-run usage forecasts 
B) user-division managers can better plan for the short-run and for the long-run 
C) the costs of unused capacity are highlighted 
D) variations in one division's usage affect another division's allocation 
A) user-division managers are motivated to make accurate long-run usage forecasts 
B) user-division managers can better plan for the short-run and for the long-run 
C) the costs of unused capacity are highlighted 
D) variations in one division's usage affect another division's allocation

Question 13

Describe and discuss the two methods of allocating revenues of a bundled package to the individual products in that package. Describe any special problems associated with the method.

Accepted Answer

Method 1. The stand-alone revenue-alloca

Question 14

Answer the following questions using the information below:
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
  
-Using the step-down method, what amount of Data Center Department cost will be allocated to the Warehouse Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Accepted Answer

A) $50,000 
B) $150,000 
C) $15,000 
D) $0 
A) $50,000 
B) $150,000 
C) $15,000 
D) $0

Question 15

When budgeted cost-allocation rates are used, user-division managers face uncertainty about the allocation rates for that budget period.

Accepted Answer

A) True 
 B)False

Question 16

Answer the following questions using the information below:
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
  
-Using the direct method, what amount of Personnel Department costs will be allocated to Department A?

Accepted Answer

A) $20,000 
B) $32,000 
C) $48,000 
D) $60,000 
A) $20,000 
B) $32,000 
C) $48,000 
D) $60,000

Question 17

Under the stand-alone method of allocating common costs:

Accepted Answer

A) a ranking is used to allocate costs among the users 
B) disputes can arise over who is the primary user 
C) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs 
D) an incentive is created to be the first-ranked user 
A) a ranking is used to allocate costs among the users 
B) disputes can arise over who is the primary user 
C) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs 
D) an incentive is created to be the first-ranked user

Question 18

Answer the following questions using the information below:
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
  
-Using the direct method, what amount of Personnel Department costs will be allocated to Department B?

Accepted Answer

A) $20,000 
B) $32,000 
C) $48,000 
D) $60,000 
A) $20,000 
B) $32,000 
C) $48,000 
D) $60,000

Question 19

Answer the following questions using the information below:
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
  
-Using the step-down method, what amount of Data Center Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

Accepted Answer

A) $117,342 
B) $66,667 
C) $92,592 
D) $83,333 
A) $117,342 
B) $66,667 
C) $92,592 
D) $83,333

Question 20

To discourage unnecessary use of a support department, management might:

Accepted Answer

A) not allocate any support department costs to user departments 
B) allocate support department costs based upon user department usage 
C) allocate a fixed amount of support department costs to each department regardless of use 
D) issue memos on useful services provided by the support department 
A) not allocate any support department costs to user departments 
B) allocate support department costs based upon user department usage 
C) allocate a fixed amount of support department costs to each department regardless of use 
D) issue memos on useful services provided by the support department

The method that ranks individual products in a bundle for revenue allocation is the:

________ occurs where revenues, related but NOT traceable to individual products, are assigned to those individual products.

The practical capacity method of allocating costs is:

The stand-alone method may use selling price or unit costs to allocate revenues.

Contract disputes regarding cost allocation can be reduced by defining:

Cost-based prices:

________ is a cost that the contract parties agree to include in the costs to be reimbursed.

The direct allocation method allows for no recognition of services rendered by support departments to other support departments.

Under the dual-rate cost-allocation method, when fixed costs are allocated based on actual usage then:

Describe and discuss the two methods of allocating revenues of a bundled package to the individual products in that package. Describe any special problems associated with the method.

When budgeted cost-allocation rates are used, user-division managers face uncertainty about the allocation rates for that budget period.

Under the stand-alone method of allocating common costs:

To discourage unnecessary use of a support department, management might:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 15: Allocation of Support-Department Costs, Common Costs, and Revenues

The method that ranks individual products in a bundle for revenue allocation is the:

________ occurs where revenues, related but NOT traceable to individual products, are assigned to those individual products.

The practical capacity method of allocating costs is:

The stand-alone method may use selling price or unit costs to allocate revenues.

Contract disputes regarding cost allocation can be reduced by defining:

Cost-based prices:

________ is a cost that the contract parties agree to include in the costs to be reimbursed.

The direct allocation method allows for no recognition of services rendered by support departments to other support departments.

Under the dual-rate cost-allocation method, when fixed costs are allocated based on actual usage then:

Describe and discuss the two methods of allocating revenues of a bundled package to the individual products in that package. Describe any special problems associated with the method.

When budgeted cost-allocation rates are used, user-division managers face uncertainty about the allocation rates for that budget period.

Under the stand-alone method of allocating common costs:

To discourage unnecessary use of a support department, management might:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters