Question 1

An advantage of the single-rate method is that it is the most accurate method of cost-allocation.

Accepted Answer

A) True 
 B)False

Question 2

Harbor Corp currently leases a corporate suite in an office building for a cost of $300,000 a year.Only 81% of the corporate suite is currently being used.A start-up business has proposed a plan that would use the other 19% of the suite and increase the overall costs of maintaining the space by $28,139.If the stand-alone method were used,what amount of cost would be allocated to the start-up business? (Round the final answer to the nearest dollar. )

Accepted Answer

A) $79,793 
B) $57,000 
C) $62,346 
D) $51,654 
A) $79,793 
B) $57,000 
C) $62,346 
D) $51,654

Question 3

Cost-plus contracts negotiated with suppliers of the government usually involves ________.

Accepted Answer

A) a price that allows the contractor to break-even 
B) a price that covers the contract's cost plus other noncash benefits 
C) the supplier's cost to perform the contact (provide the product or service)plus a fee 
D) a price that covers the contractor's direct costs plus an amount to cover overhead costs 
A) a price that allows the contractor to break-even 
B) a price that covers the contract's cost plus other noncash benefits 
C) the supplier's cost to perform the contact (provide the product or service)plus a fee 
D) a price that covers the contractor's direct costs plus an amount to cover overhead costs

Question 4

Hanung Corp has two service departments,Maintenance and Personnel.Maintenance Department costs of $400,000 are allocated on the basis of budgeted maintenance-hours.Personnel Department costs of $200,000 are allocated based on the number of employees.The costs of operating departments A and B are $240,000 and $360,000,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? (Do not round any intermediary calculations. )

Accepted Answer

A) $58,824 
B) $52,632 
C) $70,588 
D) $141,176 
A) $58,824 
B) $52,632 
C) $70,588 
D) $141,176

Question 5

One version of the reciprocal method of cost allocation uses a sequence that begins with allocating the costs of the support department that renders the lowest amount of services to support departments and ends with the allocation of costs of the department that renders the highest dollar amount of services to other support departments.

Accepted Answer

A) True 
 B)False

Question 6

To discourage unnecessary use of a support department,management might ________.

Accepted Answer

A) allocate user department costs based upon support department usage 
B) allocate support department costs based upon user department usage 
C) allocate a fixed amount of support department costs to each and every department 
D) allocate a fixed amount of user department costs to each and every department 
A) allocate user department costs based upon support department usage 
B) allocate support department costs based upon user department usage 
C) allocate a fixed amount of support department costs to each and every department 
D) allocate a fixed amount of user department costs to each and every department

Question 7

When actual cost-allocations rates are used,which of the following would be true?

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 are unaware of the allocated amounts until the end of the budget period 
D) managers know with certainty the rates to be used in that budget period 
A) user divisions pay for costs that exceed budgeted amounts 
B) managers of the supplier division are motivated to improve efficiency 
C) user divisions are unaware of the allocated amounts until the end of the budget period 
D) managers know with certainty the rates to be used in that budget period

Question 8

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 300,000 to 500,000 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 320,000 copies.If a single-rate cost-allocation method is used,what amount of copying facility costs will be budgeted for the Marketing Department? (Round any intermediary calculations to the nearest cent. )

Accepted Answer

A) $18,200 
B) $6000 
C) $12,200 
D) $21,250 
A) $18,200 
B) $6000 
C) $12,200 
D) $21,250

Question 9

Under the incremental method of allocating common costs ________.

Accepted Answer

A) the parties are interested in being viewed as primary users 
B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs 
C) the first-incremental user bears a higher proportion of the cost in comparison with the primary user 
D) the primary user bears the maximum of the total cost 
A) the parties are interested in being viewed as primary users 
B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs 
C) the first-incremental user bears a higher proportion of the cost in comparison with the primary user 
D) the primary user bears the maximum of the total cost

Question 10

Illumination Corp operates one central plant that has two divisions,the Flashlight Division and the Night Light Division.The following data apply to the coming budget year:
Budgeted costs of operating the plant for 2000 to 3000 hours:
 
Budgeted long-run usage per year:
 
Assume that practical capacity is used to calculate the allocation rates.
Actual usage for the year by the Flashlight Division was 1400 hours and by the Night Light Division was 700 hours.If a dual-rate cost-allocation method is used,what amount of cost will be allocated to the Night Light Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.

Accepted Answer

A) $516,000 
B) $586,000 
C) $532,000 
D) $602,000 
A) $516,000 
B) $586,000 
C) $532,000 
D) $602,000

Question 11

Which of the following is an example of a bundled product?

Accepted Answer

A) a checking account 
B) A complete mechanics tool kit 
C) an accounting textbook with an access code to a homework/study system 
D) Microsoft Excel 
A) a checking account 
B) A complete mechanics tool kit 
C) an accounting textbook with an access code to a homework/study system 
D) Microsoft Excel

Question 12

The FASB (Financial Accounting Standards Board)provides cost accounting guidance (standards)for U.S.government contractors who do business with the federal government.

Accepted Answer

A) True 
 B)False

Question 13

The single-rate method transforms the direct costs per hour into indirect costs to users of that facility.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not one of the methods used to to allocate the revenues of a bundled product?

Accepted Answer

A) direct revenue method 
B) stand-alone selling prices method 
C) Stand-alone physical units method 
D) incremental revenue method 
A) direct revenue method 
B) stand-alone selling prices method 
C) Stand-alone physical units method 
D) incremental revenue method

Question 15

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 120,000 copies and by the Operations Department was 380,000 copies.If a dual-rate cost-allocation method is used,what amount of copying facility costs will be budgeted for the Operations Department?

Accepted Answer

A) $65,100 
B) $68,600 
C) $64,140 
D) $67,640 
A) $65,100 
B) $68,600 
C) $64,140 
D) $67,640

Question 16

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

Accepted Answer

A) True 
 B)False

Question 17

Revenue allocation is used when ________.

Accepted Answer

A) revenues cannot be estimated but can be traced to specific cost objects 
B) revenues are related to a particular revenue object but cannot be traced to it in an economically feasible way 
C) revenues are not related to a particular object but can be traced to that object in an economically feasible way 
D) revenue optimization is the goal 
A) revenues cannot be estimated but can be traced to specific cost objects 
B) revenues are related to a particular revenue object but cannot be traced to it in an economically feasible way 
C) revenues are not related to a particular object but can be traced to that object in an economically feasible way 
D) revenue optimization is the goal

Question 18

The Speedjet 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 150,000 to 250,000 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 80,000 technician hours and by the Small Plane Department was 120,000 technician hours.If a dual-rate cost-allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.

Accepted Answer

A) $10,300,000 
B) $10,100,000 
C) $9,600,000 
D) $10,800,000 
A) $10,300,000 
B) $10,100,000 
C) $9,600,000 
D) $10,800,000

Question 19

Electro Corp sells a refrigerator and a freezer as a single package for $1150.Other data are in the chart below.
 
Using the stand-alone method with manufacturing cost per unit as the weight for revenue allocation,what amount will be allocated to the refrigerator? (Do not round any intermediary calculations. )

Accepted Answer

A) $304.82 
B) $575.00 
C) $661.45 
D) $845.18 
A) $304.82 
B) $575.00 
C) $661.45 
D) $845.18

Question 20

Goldfarb's Book and Music Store has two service departments,Warehouse and Data Center.Warehouse Department costs of $370,000 are allocated on the basis of budgeted warehouse-hours.Data Center Department costs of $200,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $142,500 and $171,000,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 intermediary calculations to three decimal places. )

Accepted Answer

A) $144,992 
B) $91,979 
C) $123,487 
D) $108,021 
A) $144,992 
B) $91,979 
C) $123,487 
D) $108,021

An advantage of the single-rate method is that it is the most accurate method of cost-allocation.

Cost-plus contracts negotiated with suppliers of the government usually involves ________.

To discourage unnecessary use of a support department,management might ________.

When actual cost-allocations rates are used,which of the following would be true?

Under the incremental method of allocating common costs ________.

Which of the following is an example of a bundled product?

The FASB (Financial Accounting Standards Board)provides cost accounting guidance (standards)for U.S.government contractors who do business with the federal government.

The single-rate method transforms the direct costs per hour into indirect costs to users of that facility.

Which of the following is not one of the methods used to to allocate the revenues of a bundled product?

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

Revenue allocation is used when ________.

The Manager and Management Accounting

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

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

An advantage of the single-rate method is that it is the most accurate method of cost-allocation.

Cost-plus contracts negotiated with suppliers of the government usually involves ________.

To discourage unnecessary use of a support department,management might ________.

When actual cost-allocations rates are used,which of the following would be true?

Under the incremental method of allocating common costs ________.

Which of the following is an example of a bundled product?

The FASB (Financial Accounting Standards Board)provides cost accounting guidance (standards)for U.S.government contractors who do business with the federal government.

The single-rate method transforms the direct costs per hour into indirect costs to users of that facility.

Which of the following is not one of the methods used to to allocate the revenues of a bundled product?

The selling prices method under stand-alone revenue-allocation method is best because the weights explicitly consider the prices customers are willing to pay for the individual products

Revenue allocation is used when ________.

The Manager and Management Accounting

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

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

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

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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