Question 1

Which of the following is a cost that is not usually allocated to a department?

Accepted Answer

A) Direct labor used. 
B) Manager's salary for the department. 
C) Property taxes for the factory building. 
D) All of the answers are correct. 
A) Direct labor used. 
B) Manager's salary for the department. 
C) Property taxes for the factory building. 
D) All of the answers are correct.

Question 2

What is the proper sequence of steps in allocating costs to production departments?

Accepted Answer

A) Assign direct costs to departments,allocate indirect costs to departments,and allocate service department costs to production departments. 
B) Assign indirect costs to departments,allocate direct costs to departments,and allocate service department costs to production departments. 
C) Assign service department costs to production departments,allocate direct costs to departments,and allocate indirect costs to production departments. 
D) Assign indirect costs to departments,allocate service department costs to departments,and allocate direct costs to production departments. 
A) Assign direct costs to departments,allocate indirect costs to departments,and allocate service department costs to production departments. 
B) Assign indirect costs to departments,allocate direct costs to departments,and allocate service department costs to production departments. 
C) Assign service department costs to production departments,allocate direct costs to departments,and allocate indirect costs to production departments. 
D) Assign indirect costs to departments,allocate service department costs to departments,and allocate direct costs to production departments.

Question 3

The step method allocates costs of service departments to

Accepted Answer

A) other service departments. 
B) producing departments. 
C) joint products. 
D) other service departments and producing departments. 
A) other service departments. 
B) producing departments. 
C) joint products. 
D) other service departments and producing departments.

Question 4

How are marketing and administrative costs allocated to departments for purposes of performance evaluation?

Accepted Answer

Management often applies techn

Question 5

What is the first step in allocating service department costs to production departments?

Accepted Answer

A) Assign overhead costs that are directly attributable to a service or production department. 
B) Allocate other overhead costs based on appropriate cost drivers. 
C) Allocate service department costs to production departments. 
D) None of the answers is correct. 
A) Assign overhead costs that are directly attributable to a service or production department. 
B) Allocate other overhead costs based on appropriate cost drivers. 
C) Allocate service department costs to production departments. 
D) None of the answers is correct.

Question 6

Formula,Inc. ,processes sugar into candy and powdered drink mix.The sugar costs $61,000 per load.The process involves mixing the sugar for 2 hours,producing 60,000 packs of candy with a market value of $25,000,and 20,000 packs of drink mix with a market value of $100,000.The joint cost of the mixing process is $28,600.
Required:
a.If the sugar and the mixing process costs are to be allocated on the basis of units of output,what cost is assigned to each product?
b.If the sugar and the mixing process costs are allocated on the basis of the net realizable value,what cost is assigned to each product?
c.How much profit or loss does the candy product provide using the data in this problem and your analysis in requirement (a)? Is it really possible to determine which product is more profitable? Explain why or why not.

Accepted Answer

a.Allocation on the Basis of Units of Ou

Question 7

Why do companies allocate common costs to departments and products?

Accepted Answer

A) to develop product cost information for purposes of pricing and bidding. 
B) contract cost reimbursement. 
C) motivation. 
D) All of the answers are correct. 
A) to develop product cost information for purposes of pricing and bidding. 
B) contract cost reimbursement. 
C) motivation. 
D) All of the answers are correct.

Question 8

How is activity-based costing used to allocate service department costs?

Accepted Answer

Applying the techniques of activity-base

Question 9

Waterbury Box Company
General Factory Administration and Maintenance are service departments in the Waterbury Box Company.Management has decided to allocate maintenance costs on the basis of the area in each department and general factory administration costs on the basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
   
Refer to the Waterbury Box Company.Use the direct method to allocate service department costs to the operating departments.

Accepted Answer

The answer of Waterbury Box Company
General Factory Administration and Maintenance...

Question 10

Why is activity-based costing used to allocate service department costs?

Accepted Answer

A) There are fewer cost-allocation bases. 
B) It can lead to improved allocation of production department costs to service departments. 
C) It results in identifying more accurate cost-allocation bases. 
D) None of the answers is correct. 
A) There are fewer cost-allocation bases. 
B) It can lead to improved allocation of production department costs to service departments. 
C) It results in identifying more accurate cost-allocation bases. 
D) None of the answers is correct.

Question 11

Waterbury Box Company
General Factory Administration and Maintenance are service departments in the Waterbury Box Company.Management has decided to allocate maintenance costs on the basis of the area in each department and general factory administration costs on the basis of labor hours the employees worked in each of their respective departments.
The following data appears in the company records for the current period:
   
Refer to the Waterbury Box Company.Use the step method to allocate service department costs to the operating departments,starting with general factory administration.

Accepted Answer

Step Method,Starting

Question 12

Stephanie Company
Stephanie Company has two production departments: D and J.Stephanie also has 3 service departments: Personnel,Administration,and Shipping.Shipping costs are allocated on the basis of number of packages,while Personnel and Administration costs are allocated using number of employees.Assume that the ranking of the benefits provided is in the order listed below.
 
Refer to Stephanie Company.Using the step method,what amount of Administration costs is allocated to Department J (rounded to the nearest $)?

Accepted Answer

A) $ 97,561 
B) $216,216 
C) $273,115 
D) $409,673 
A) $ 97,561 
B) $216,216 
C) $273,115 
D) $409,673

Question 13

Pine Tar Forest Products has two production departments (Planting and Harvesting)and two service departments (Cafeteria and Repairs).The service department costs must be allocated to production departments.Management has decided to allocate the cost of the cafeteria to other departments based upon the average number of employees and the cost of the Repairs Department based upon the number of machine hours used.
 
Regardless of the allocation method used,Pine Tar Forest Products always starts the allocation process with the Cafeteria Department.
If Pine Tar Forest Products distributes costs directly (direct method)from service departments to productions departments,what additional overhead costs should be allocated from the service departments to the Planting Department?

Accepted Answer

A) $56,800 
B) $54,400 
C) $35,940 
D) $67,200 
A) $56,800 
B) $54,400 
C) $35,940 
D) $67,200

Question 14

Charley's Products allocates telephone expenses based on a variable rate of $1 per phone call.It allocates the fixed monthly charge equally over its budgeted usage.Able Division expected to make 300 telephone calls,but actually made 350.Baker Division expected to make 300 telephone calls,but actually made 250.Actual fixed costs for the month totaled $3,000.What are the amounts allocated to the two divisions using a dual rate of allocation?

Accepted Answer

A) Able Division = $2,259,Baker Division = $1,291 
B) Able Division = $2,209,Baker Division = $1,391 
C) Able Division = $1,850,Baker Division = $1,750 
D) Able Division = $1,800,Baker Division = $1,800 
A) Able Division = $2,259,Baker Division = $1,291 
B) Able Division = $2,209,Baker Division = $1,391 
C) Able Division = $1,850,Baker Division = $1,750 
D) Able Division = $1,800,Baker Division = $1,800

Question 15

Northstar Timber processes timber into Grade A and Grade B lumber.Timber costs $200 per unit,where one unit equals 1,000 board feet.The process involves cutting timber into the two grades of lumber.Each unit of timber produces .25 unit (250 board feet)of Grade A lumber with a market value of $240 and .75 unit (750 board feet)of Grade B with a market value of $160.The joint cost of the production process is $100 per unit.
Required:
a.Assume that the joint costs of the two grades of lumber are to be allocated on the basis of units of output.What cost is assigned to each product (for .25 unit of Grade A and .75 unit of Grade B)?
b.If the joint costs are allocated on the basis of the net realizable value,what cost is assigned to each product? How much profit or loss does the Grade A lumber earn? Is it really possible to determine which product is more profitable? Explain why or why not.

Accepted Answer

Joint cost = $300 (= $200 cost of timber

Question 16

Jamar Company has two production departments,Tubing and Packing,and two service departments,Quality Control and Maintenance.In June,the Quality Control department provided 2,000 hours of service- 1,047 hours to Tubing,255 hours to Maintenance,and 698 hours to Packing.In the same month,Maintenance provided 2,750 hours to Tubing,1,900 hours to Packing,and 350 hours to Quality Control.Quality Control incurred costs of $100,000,and Maintenance incurred costs of $210,000.
Required:
Use the step method to allocate service department costs sequentially based on hours of service provided.Start with Maintenance and then allocate Quality Control.Check your solution by making certain that the firm finally allocates $310,000 to the production departments.

Accepted Answer

The answer of Jamar Company has two production departments,Tubing and...

Question 17

Why are joint-process costs allocated?

Accepted Answer

A) Used for performance evaluations. 
B) Used for reporting purposes. 
C) Used for establishing regulated rates. 
D) All of the answers are correct. 
A) Used for performance evaluations. 
B) Used for reporting purposes. 
C) Used for establishing regulated rates. 
D) All of the answers are correct.

Question 18

How are joint-process costs allocated?

Accepted Answer

Joint-process cost allocations arise fro

Question 19

Why do companies allocate common costs to departments and products?

Accepted Answer

Firms must allocate common cos

Question 20

Which of these is a cost that results from the joint use of a facility or a service by several products,departments,or processes?

Accepted Answer

A) direct cost. 
B) indirect cost. 
C) marginal cost. 
D) variable cost. 
A) direct cost. 
B) indirect cost. 
C) marginal cost. 
D) variable cost.

Which of the following is a cost that is not usually allocated to a department?

What is the proper sequence of steps in allocating costs to production departments?

The step method allocates costs of service departments to

How are marketing and administrative costs allocated to departments for purposes of performance evaluation?

What is the first step in allocating service department costs to production departments?

Why do companies allocate common costs to departments and products?

How is activity-based costing used to allocate service department costs?

Why is activity-based costing used to allocate service department costs?

Why are joint-process costs allocated?

How are joint-process costs allocated?

Why do companies allocate common costs to departments and products?

Which of these is a cost that results from the joint use of a facility or a service by several products,departments,or processes?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Filters

Exam 13: Allocating Costs to Responsibility Centers

Which of the following is a cost that is not usually allocated to a department?

What is the proper sequence of steps in allocating costs to production departments?

The step method allocates costs of service departments to

How are marketing and administrative costs allocated to departments for purposes of performance evaluation?

What is the first step in allocating service department costs to production departments?

Why do companies allocate common costs to departments and products?

How is activity-based costing used to allocate service department costs?

Why is activity-based costing used to allocate service department costs?

Why are joint-process costs allocated?

How are joint-process costs allocated?

Why do companies allocate common costs to departments and products?

Which of these is a cost that results from the joint use of a facility or a service by several products,departments,or processes?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Filters