Question 1

A _______________________ incurs costs and generates revenues.

Accepted Answer

The answer of A _______________________ incurs costs and generates revenues....

Question 2

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

Accepted Answer

A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses, allocate service department expenses, allocate indirect expenses. 
E)  Allocate all expenses. 
A)  Identify direct expenses; allocate indirect expenses; allocate service department expenses. 
B)  Identify indirect expenses; allocate direct expenses; allocate service department expenses. 
C)  Identify service department expenses; allocate direct expenses; allocate indirect expenses. 
D)  Identify direct expenses, allocate service department expenses, allocate indirect expenses. 
E)  Allocate all expenses.

Question 3

A responsibility accounting system:

Accepted Answer

A)  Is designed to measure the performance of managers in terms of controllable costs. 
B)  Assigns responsibility for costs to the appropriate managerial level that controls those costs. 
C)  Should not hold a manager responsible for costs over which the manager has no influence. 
D)  Can be applied at any level of an organization. 
E)  All of these. 
A)  Is designed to measure the performance of managers in terms of controllable costs. 
B)  Assigns responsibility for costs to the appropriate managerial level that controls those costs. 
C)  Should not hold a manager responsible for costs over which the manager has no influence. 
D)  Can be applied at any level of an organization. 
E)  All of these.

Question 4

A company has two departments, A and B that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries and Dept. B had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% originate in Dept. B. Departmental delivery expenses for Dept. A and Dept. B,

Accepted Answer

A)  $4,500; $4,500. 
B)  $5,800; $3,200. 
C)  $5,500; $3,500. 
D)  $5,500; $4,500. 
E)  $5,400; $3,600. 
A)  $4,500; $4,500. 
B)  $5,800; $3,200. 
C)  $5,500; $3,500. 
D)  $5,500; $4,500. 
E)  $5,400; $3,600.

Question 5

Describe the information found on a responsibility accounting performance report.

Accepted Answer

A responsibility accounting pe

Question 6

A measure used to evaluate the manager of an investment center is return on total costs for the investment center.

Accepted Answer

A) True 
 B)False

Question 7

Scottie is the manager of an investment center within Hamilton Company. Using the information below, calculate (a) return on total assets and (b) investment center residual income.

Accepted Answer

(a) Investment Center Return on Total As

Question 8

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments, then operating department costs are allocated to service departments.

Accepted Answer

A) True 
 B)False

Question 9

Farber, Inc., has four departments. The Administrative Department costs are allocated to the other three departments based on the number of employees in each and the Maintenance Department costs are allocated to the Assembly and Packaging Departments based on their occupied space. Data for these departments follows: The total amount of the Administrative Department's cost that would eventually be allocated to the Packaging Department is:

Accepted Answer

A)  $4,800. 
B)  $12,000. 
C)  $10,000. 
D)  $18,000. 
E)  $13,000. 
A)  $4,800. 
B)  $12,000. 
C)  $10,000. 
D)  $18,000. 
E)  $13,000.

Question 10

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

Accepted Answer

A)  Direct expenses. 
B)  Indirect expenses. 
C)  Controllable expenses. 
D)  Uncontrollable expenses. 
E)  Fixed expenses. 
A)  Direct expenses. 
B)  Indirect expenses. 
C)  Controllable expenses. 
D)  Uncontrollable expenses. 
E)  Fixed expenses.

Question 11

White Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period: The total cost of operating the Milling Department for the current period is:

Accepted Answer

A)  $14,280. 
B)  $15,912. 
C)  $76,500. 
D)  $90,780. 
E)  $92,412. 
A)  $14,280. 
B)  $15,912. 
C)  $76,500. 
D)  $90,780. 
E)  $92,412.

Question 12

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

Accepted Answer

A) True 
 B)False

Question 13

An activity __________________ is a temporary account accumulating the costs a company incurs to support an identified set of activities.

Accepted Answer

The answer of An activity __________________ is a temporary account...

Question 14

A company rents a building with a total of 100,000 square feet, which are evenly divided between two floors. The space on the first floor is considered twice as valuable as that on the second floor. The total monthly rent for the building is $30,000. How much of the monthly rental expense should be allocated to a department that occupies 10,000 square feet on the first floor?

Accepted Answer

A)  $6,000. 
B)  $5,000. 
C)  $3,000. 
D)  $4,000. 
E)  $2,000. 
A)  $6,000. 
B)  $5,000. 
C)  $3,000. 
D)  $4,000. 
E)  $2,000.

Question 15

The most useful evaluation of a manager's cost performance is based on:

Accepted Answer

A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Uncontrollable expenses. 
E)  Direct costs. 
A)  Controllable costs. 
B)  Contribution percentages. 
C)  Departmental contributions to overhead. 
D)  Uncontrollable expenses. 
E)  Direct costs.

Question 16

Camden Properties is developing a golf course subdivision that includes 230 home lots; 150 lots are golf course lots and will sell for $125,000 each; 80 are street frontage lots and will sell for $78,125. The developer acquired the land for $5,800,000 and spent another $2,300,000 on street and utilities improvement. Assign the joint land and improvement costs to the lots using the value basis and determine the average cost per lot.

Accepted Answer

The answer of Camden Properties is developing a golf course...

Question 17

List the steps required to prepare a departmental income statement.

Accepted Answer

Step 1 is to accumulate direct expenses

Question 18

Activity cost pools are an important part of the allocation of overhead costs using activity-based costing.

Accepted Answer

A) True 
 B)False

Question 19

Belgrade Lakes Properties is developing a golf course subdivision that includes 225 home lots; 100 lots are golf course lots and will sell for $95,000 each; 125 are street frontage lots and will sell for $65,000. The developer acquired the land for $1,800,000 and spent another $1,400,000 on street and utilities improvement. Compute the amount of joint cost to be allocated to the golf course lots using value basis.

Accepted Answer

A)  $1,724,800. 
B)  $1,777,920. 
C)  $2,018,920. 
D)  $1,422,080. 
E)  $1,475,200. 
A)  $1,724,800. 
B)  $1,777,920. 
C)  $2,018,920. 
D)  $1,422,080. 
E)  $1,475,200.

Question 20

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

Accepted Answer

Department

A _______________________ incurs costs and generates revenues.

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

A responsibility accounting system:

Describe the information found on a responsibility accounting performance report.

A measure used to evaluate the manager of an investment center is return on total costs for the investment center.

Scottie is the manager of an investment center within Hamilton Company. Using the information below, calculate (a) return on total assets and (b) investment center residual income.

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments, then operating department costs are allocated to service departments.

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

An activity __________________ is a temporary account accumulating the costs a company incurs to support an identified set of activities.

The most useful evaluation of a manager's cost performance is based on:

List the steps required to prepare a departmental income statement.

Activity cost pools are an important part of the allocation of overhead costs using activity-based costing.

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

Exam 21: Cost Allocation and Performance Measurement

A _______________________ incurs costs and generates revenues.

In the preparation of departmental income statements, the preparer completes the following steps in the following order:

A responsibility accounting system:

Describe the information found on a responsibility accounting performance report.

A measure used to evaluate the manager of an investment center is return on total costs for the investment center.

Scottie is the manager of an investment center within Hamilton Company. Using the information below, calculate (a) return on total assets and (b) investment center residual income.

Traditional two-stage cost allocation means that indirect costs are first allocated to both operating and service departments, then operating department costs are allocated to service departments.

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

The number of hours that a department uses equipment and machinery is a reasonable basis for allocating depreciation.

An activity __________________ is a temporary account accumulating the costs a company incurs to support an identified set of activities.

The most useful evaluation of a manager's cost performance is based on:

List the steps required to prepare a departmental income statement.

Activity cost pools are an important part of the allocation of overhead costs using activity-based costing.

A _____________________________ provides information for managers to use to evaluate the profitability or cost effectiveness of each department's activities.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters