Exam 4: Cost Accumulation,tracing,and Allocation

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the hourly wages of sewing machine operators be classified?

Select the false statement from the following.

Joint costs total $24,000 for a production process that yields two main products,A and B.If joint costs are allocated to the products on the basis of their respective $20,000 and $30,000 sales values,2/3 of the joint costs (or $16,000)would be allocated to Product A.

A manager believes that the number of units sold drives the company's selling costs.The number of units sold would be referred to as the cost driver.

Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following is an indirect cost,assuming the cost object is the Clock Department?

Craig Manufacturing Company operates its three production departments within a single facility.Each department produces its own products and maintains its own production equipment.Although they share a common facility,each department is overseen by a separate supervisor.Which one of the following costs is a direct cost of each department?

How can the use of a predetermined overhead rate prevent timing problems in determining the costs of products?

Both direct and indirect costs can be relevant to a particular decision.

Illustrate with examples how cost definitions are independent and context sensitive.In other words,indicate how a cost can be classified as fixed or variable and direct or indirect,depending on the situation.

Inaccurate allocation of joint costs to the individual products could cause an unprofitable product to appear to be profitable.

Use of the direct method to allocate service department costs may cause distortions in the measurement of cost objects.

How are indirect costs assigned to cost objects? Are they traced to cost objects?

Costs that can be traced to a cost object in a cost-effective way are called direct costs.

For a manufacturer,measures of volume may include:

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.During the upcoming year,the company expects to make 2,000 comforters.With respect to the comforters,how would the fabric used to make the comforters be classified?

Nature's Soap manufactures Bar soap and Liquid soap.Of the following costs,which would be an indirect cost to the Liquid Department?

Select the term from the list provided that best matches each of the following descriptions.

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year.It is estimated that these employees move 600,000 pounds of material per year.If 60,000 pounds are moved in March,how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)

Which of the following costs generally can be traced directly to units of product?

Select the incorrect statement from the following.