Question 1

The preferred guidelines for allocating service department costs to user departments include ________.

Accepted Answer

A)  combining variable-cost and fixed-cost pools 
B)  establishing details about cost allocation after providing services 
C)  using actual costs for allocation of fixed costs and variable costs 
D)  allocating variable-cost and fixed-cost pools separately 
A)  combining variable-cost and fixed-cost pools 
B)  establishing details about cost allocation after providing services 
C)  using actual costs for allocation of fixed costs and variable costs 
D)  allocating variable-cost and fixed-cost pools separately

Question 2

Robert Company has two production departments called Assembly and Finishing.The maintenance department serves both production departments.Maintenance costs are allocated based on labor hours.Budgeted fixed costs for the maintenance department are $30,000.Budgeted variable costs for the maintenance department are $5.00 per labor hour.Actual maintenance department costs are $36,000 fixed and $100,000 variable.Other relevant data follow:
$$\begin{array} { l l l } 
 & \text { Assembly } & \text { Pinishing } \
\text { Capacity available } & 20,000 \text { labor hours } & 15,000 \text { labor hours } \
\text { Capacity used }& 15,000 \text { labor hours } & 9,000 \text { labor hours }
\end{array}$$
The amount of variable maintenance department costs allocated to the Assembly Department should be ________.

Accepted Answer

A)  $48,000 
B)  $62,500 
C)  $75,000 
D)  $100,000 
A)  $48,000 
B)  $62,500 
C)  $75,000 
D)  $100,000

Question 3

McArthur Company makes three types of products.The company has two types of customers.The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations.The following data are available:
$\begin{array}{llll}&\text { product } 1&\text { product } 2&\text { product } 3\
\text { Sales } & \$ 5,000 & \$ 6,000 & \$ 30,000 \
\text { Cost of goods sold } & \underline{4,000} & \underline{4,800} & \underline{15,000} \
\text { Gross margin }&\$1,000&\$1,200&\$15,000
\end{array}$
$\begin{array}{lll}&\text { Customer type }1&\text { Customer type }2\
\text { Product 1 Sales } & \$ 500 & \$ 4,500 \
\text { Product 2 Sales } & \$ 1,000 & \$ 5,000 \
\text { Product 3 Sales } & \$ 16,000 & \$ 14,000 \
\text { Manager visits } & 4 & 12
\end{array}$
What is the cost to serve for Customer Type 1?

Accepted Answer

A)  $2,400 
B)  $3,000 
C)  $9,600 
D)  $12,000 
A)  $2,400 
B)  $3,000 
C)  $9,600 
D)  $12,000

Question 4

Utah Company makes three types of products.The company has two types of customers.The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations.The following data are available:
$\begin{array}{llll}&\text { Product } 1&\text { Product } 2&\text { Product } 3\
\text { Sales } & \$ 5,000 & \$ 6,000 & \$ 30,000 \
\text { Cost of goods sold } & \underline{4,000} & \underline{4,800} & \underline{15,000} \
\text { Gross margin }&\$1,000&\$1,200&\$15,000
\end{array}$
$\begin{array}{lll}&\text { Customer type }1&\text { Customer type }2\
\text { Product 1 Sales } & \$ 500 & \$ 4,500 \
\text { Product 2 Sales } & \$ 1,000 & \$ 5,000 \
\text { Product 3 Sales } & \$ 16,000 & \$ 14,000 \
\text { Manager visits } & 4 & 12
\end{array}$
What is the cost to serve for Customer Type 2?

Accepted Answer

A)  $2,400 
B)  $6,000 
C)  $9,000 
D)  $12,000 
A)  $2,400 
B)  $6,000 
C)  $9,000 
D)  $12,000

Question 5

Revenues from the by-product less separable costs associated with the by-product are added to the cost of the main products.

Accepted Answer

A) True 
 B)False

Question 6

The three methods for allocating service department costs to other departments are ________.

Accepted Answer

A)  step-down, indirect and reciprocal allocation 
B)  direct, step-up and reciprocal allocation 
C)  step-down, direct and reciprocal allocation 
D)  step-up, indirect and simultaneous equations 
A)  step-down, indirect and reciprocal allocation 
B)  direct, step-up and reciprocal allocation 
C)  step-down, direct and reciprocal allocation 
D)  step-up, indirect and simultaneous equations

Question 7

Which of the following methods of allocating service department costs to user departments is superior?

Accepted Answer

A)  The step down method is superior because it is easy to understand. 
B)  The direct method is superior because it recognizes the support provided between service departments. 
C)  The direct and step down methods allocate the same amount of total costs so both methods are comparable. 
D)  The step down method is superior because it recognizes the support provided between service departments. 
A)  The step down method is superior because it is easy to understand. 
B)  The direct method is superior because it recognizes the support provided between service departments. 
C)  The direct and step down methods allocate the same amount of total costs so both methods are comparable. 
D)  The step down method is superior because it recognizes the support provided between service departments.

Question 8

Denise Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:
$$\begin{array} { l l l } 
\text { Product } & \text { Units Produced } & \text { sales Value at Split-off } \
\hline X& 5,000 & \$ 70,000 \
Y & 3,000 & \$ 30,000 \
Z & 2,000 & \$ 100,000
\end{array}$$
Assume the relative-sales-value 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)  $125,000 
D)  $250,000 
A)  $70,000 
B)  $87,500 
C)  $125,000 
D)  $250,000

Question 9

The phrase " cost distribution" refers to the allocation of total departmental costs to revenue-producing products or services.

Accepted Answer

A) True 
 B)False

Question 10

Kemp Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:
$$\begin{array} { l l l } 
\text { Product } & \text { Units Produced } & \text { sales Value at Split-off } \
\hline X& 5,000 & \$ 70,000 \
Y & 3,000 & \$ 30,000 \
Z & 2,000 & \$ 100,000
\end{array}$$
Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Y?

Accepted Answer

A)  $30,000 
B)  $37,500 
C)  $75,000 
D)  $250,000 
A)  $30,000 
B)  $37,500 
C)  $75,000 
D)  $250,000

The preferred guidelines for allocating service department costs to user departments include ________.

Revenues from the by-product less separable costs associated with the by-product are added to the cost of the main products.

The three methods for allocating service department costs to other departments are ________.

Which of the following methods of allocating service department costs to user departments is superior?

The phrase " cost distribution" refers to the allocation of total departmental costs to revenue-producing products or services.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

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

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Exam 12: Cost Allocation

The preferred guidelines for allocating service department costs to user departments include ________.

Revenues from the by-product less separable costs associated with the by-product are added to the cost of the main products.

The three methods for allocating service department costs to other departments are ________.

Which of the following methods of allocating service department costs to user departments is superior?

The phrase " cost distribution" refers to the allocation of total departmental costs to revenue-producing products or services.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

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