Question 1

When actual cost-allocations rates are used:

Accepted Answer

A) user divisions pay for costs that exceed budgeted amounts 
B) managers of the supplier division are motivated to improve efficiency 
C) user divisions do not know allocated amounts until the end of the accounting period 
D) managers of the user divisions may be tempted to underestimate planned usage 
A) user divisions pay for costs that exceed budgeted amounts 
B) managers of the supplier division are motivated to improve efficiency 
C) user divisions do not know allocated amounts until the end of the accounting period 
D) managers of the user divisions may be tempted to underestimate planned usage

Question 2

The direct allocation method provides key information for outsourcing decisions regarding support services.

Accepted Answer

A) True 
 B)False

Question 3

Answer the following questions using the information below:
The Appliance Store sells a refrigerator and a freezer as a single package for $1,000. Other data are in the chart below.
  
-Using the stand-alone method with physical units as the weight for revenue allocation, what amount will be allocated to the refrigerator?

Accepted Answer

A) $500 
B) $20 
C) $775 
D) $825 
A) $500 
B) $20 
C) $775 
D) $825

Question 4

Answer the following questions using the information below:
The Quickjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year:
Budgeted costs of operating the materials laboratory
for 100,000 to 200,000 technician hours per year:
   Budgeted long-run usage in hours per year:
   Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Large Plane Department was 60,000 technician hours and by the Small Plane Department was 65,000 technician hours.
-If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Large Plane Department?

Accepted Answer

A) $10,575,000 
B) $8,225,000 
C) $18,800,000 
D) $16,000,000 
A) $10,575,000 
B) $8,225,000 
C) $18,800,000 
D) $16,000,000

When actual cost-allocations rates are used:

The direct allocation method provides key information for outsourcing decisions regarding support services.

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

When actual cost-allocations rates are used:

The direct allocation method provides key information for outsourcing decisions regarding support services.

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