Question 1

If the relationship between overhead costs and the cost drivers differs substantially across production departments,the firm should use:

Accepted Answer

A)  a plantwide overhead rate 
B)  multiple-departmental overhead rates 
C)  actual overhead activity 
D)  machine hours to determine the overhead rate 
A)  a plantwide overhead rate 
B)  multiple-departmental overhead rates 
C)  actual overhead activity 
D)  machine hours to determine the overhead rate B

Question 2

The following information about Monfort Manufacturing is available:
Using the step-down method and starting with Training Department,the cost allocated from Training Department to Machining Department is:

Accepted Answer

A)  $50,000 
B)  $98,214 
C)  $106,667 
D)  $80,000 
A)  $50,000 
B)  $98,214 
C)  $106,667 
D)  $80,000 A

Question 3

A cost pool is:

Accepted Answer

A)  a collection of costs to be assigned 
B)  the joint result of several subunit activities 
C)  the primary function of a responsibility accounting system 
D)  a performance report of the lowest level manager 
A)  a collection of costs to be assigned 
B)  the joint result of several subunit activities 
C)  the primary function of a responsibility accounting system 
D)  a performance report of the lowest level manager A

Question 4

The step/s used in cost allocation include/s:

Accepted Answer

A)  cost application 
B)  cost distribution 
C)  support department cost allocation 
D)  All of the given answers 
A)  cost application 
B)  cost distribution 
C)  support department cost allocation 
D)  All of the given answers

Question 5

Prior to allocating overheads to a product,it is necessary to allocate the costs of all support departments to the production departments.

Accepted Answer

A) True 
 B)False

Question 6

For management accounting purposes,the denominator volume for applying overhead to products may be:

Accepted Answer

A)  budgeted capacity 
B)  practical capacity 
C)  normal capacity 
D)  All of the given answers 
A)  budgeted capacity 
B)  practical capacity 
C)  normal capacity 
D)  All of the given answers

Question 7

Using the information below,what would be the profit under variable costing and absorption costing,respectively?

Accepted Answer

A)  $10 044;$8220 
B)  $9000;$13 176 
C)  $10 044;$14 220 
D)  Insufficient data to calculate 
A)  $10 044;$8220 
B)  $9000;$13 176 
C)  $10 044;$14 220 
D)  Insufficient data to calculate

Question 8

The Browning Company manufactures a single product;the standard costs per unit being variable manufacturing $8,fixed manufacturing $6.Selling and administrative costs are $2 per unit sold.The selling price is $20 per unit.Actual and budgeted fixed overhead is $900 000 for the year.Information about Browning's production activity for the year follows:
Assuming all information is provided above,the difference in profit between absorption and variable costing would be expected to be:

Accepted Answer

A)  25 000 × $8 
B)  30 000 × $8 
C)  25 000 × $6 
D)  30 000 × $6 
A)  25 000 × $8 
B)  30 000 × $8 
C)  25 000 × $6 
D)  30 000 × $6

Question 9

The 'direct method' ignores the fact that:

Accepted Answer

A)  some support departments provide services to other support departments 
B)  cost allocation is a major factor in its accountability 
C)  each department's cost is allocated only for the service consumed by it 
D)  All of the given answers 
A)  some support departments provide services to other support departments 
B)  cost allocation is a major factor in its accountability 
C)  each department's cost is allocated only for the service consumed by it 
D)  All of the given answers

Question 10

Management would prefer to use either absorption costing or variable costing depending on:

Accepted Answer

A)  which gives the highest profit figure 
B)  which is required by the Australian accounting standards 
C)  whether they consider the benefits of using variable costing outweigh the additional costs involved 
D)  which is provided at the least cost 
A)  which gives the highest profit figure 
B)  which is required by the Australian accounting standards 
C)  whether they consider the benefits of using variable costing outweigh the additional costs involved 
D)  which is provided at the least cost

Question 11

Before any costing process can occur,it is necessary to identify the cost object.

Accepted Answer

A) True 
 B)False

Question 12

Budgeted amounts of allocation bases,rather than actual amounts,are preferable allocation bases because:

Accepted Answer

A)  when actual amounts are used the behaviour of one responsibility centre affects the costs allocated to other responsibility centres. 
B)  budgeted amounts are known in advance,therefore costs are easier to allocate. 
C)  the use of actual amounts could cause fluctuations in the prices charged for a company's products or services. 
D)  budgeted amounts are known in advance,therefore costs are easier to allocate AND the use of actual amounts could cause fluctuations in the prices charged for a company's products or services. 
A)  when actual amounts are used the behaviour of one responsibility centre affects the costs allocated to other responsibility centres. 
B)  budgeted amounts are known in advance,therefore costs are easier to allocate. 
C)  the use of actual amounts could cause fluctuations in the prices charged for a company's products or services. 
D)  budgeted amounts are known in advance,therefore costs are easier to allocate AND the use of actual amounts could cause fluctuations in the prices charged for a company's products or services.

Question 13

The most widely used methods of support department cost allocations are the:

Accepted Answer

A)  direct method and cost application. 
B)  cost distribution and step-down method. 
C)  direct method and step-down method. 
D)  step-down method and cost application. 
A)  direct method and cost application. 
B)  cost distribution and step-down method. 
C)  direct method and step-down method. 
D)  step-down method and cost application.

Question 14

When estimating the costs of a cost object,direct costs are allocated and indirect costs are traced to the object.

Accepted Answer

A) True 
 B)False

Question 15

After all manufacturing overhead costs have been assigned to the production departments,the step to assign all manufacturing overhead costs accumulated in a production department to the jobs that the department has worked on is called:

Accepted Answer

A)  support department cost allocation 
B)  cost distribution 
C)  overhead application 
D)  cost apportionment 
A)  support department cost allocation 
B)  cost distribution 
C)  overhead application 
D)  cost apportionment

Question 16

The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing)and two support departments (Janitorial and Personnel).The usage of the two support departments in 2012 is as follows:
The budgeted costs in the support departments of 2012 were as follows:
Using the step-down method,what is the amount of Personnel Department cost allocated to the Assembly Department with the Personnel Department cost allocated first?

Accepted Answer

A)  $60 000 
B)  $54 000 
C)  $21 053 
D)  $28 948 
A)  $60 000 
B)  $54 000 
C)  $21 053 
D)  $28 948

Question 17

Jasmine Doh is considering using cost drivers that are measured in dollars (rather than physical units)for her company.Your advice is:

Accepted Answer

A)  This is a good idea as cost drivers measured in dollars are usually already recorded in the accounting system. 
B)  This is a good idea as it avoids estimating costs associated with each physical unit of cost driver. 
C)  This is a bad idea because dollar-based cost drivers are subject to price change. 
D)  This is a bad idea because using dollar-based cost drivers oversimplifies the cost allocation process. 
A)  This is a good idea as cost drivers measured in dollars are usually already recorded in the accounting system. 
B)  This is a good idea as it avoids estimating costs associated with each physical unit of cost driver. 
C)  This is a bad idea because dollar-based cost drivers are subject to price change. 
D)  This is a bad idea because using dollar-based cost drivers oversimplifies the cost allocation process.

Question 18

The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing)and two support departments (Janitorial and Personnel).The usage of the two support departments in 2012 is as follows:
The budgeted costs in the support departments of 2012 were as follows:
Using the step-down method,what is the amount of Janitorial Department cost allocated to the Assembly Department with the Personnel Department cost allocated first?

Accepted Answer

A)  $24 842 
B)  $28 948 
C)  $34 158 
D)  $23 600 
A)  $24 842 
B)  $28 948 
C)  $34 158 
D)  $23 600

Question 19

The support department cost allocation method that recognises some of the reciprocal services between support departments is called the:

Accepted Answer

A)  step-down method 
B)  reciprocal method 
C)  dual cost allocation method 
D)  joint cost method 
A)  step-down method 
B)  reciprocal method 
C)  dual cost allocation method 
D)  joint cost method

Question 20

When management elect to calculate the overhead rate using a relatively long period of time,the overhead rate is called a normalised overhead rate.

Accepted Answer

A) True 
 B)False

If the relationship between overhead costs and the cost drivers differs substantially across production departments,the firm should use:

The following information about Monfort Manufacturing is available: Using the step-down method and starting with Training Department,the cost allocated from Training Department to Machining Department is:

A cost pool is:

The step/s used in cost allocation include/s:

Prior to allocating overheads to a product,it is necessary to allocate the costs of all support departments to the production departments.

For management accounting purposes,the denominator volume for applying overhead to products may be:

Using the information below,what would be the profit under variable costing and absorption costing,respectively?

The 'direct method' ignores the fact that:

Management would prefer to use either absorption costing or variable costing depending on:

Before any costing process can occur,it is necessary to identify the cost object.

Budgeted amounts of allocation bases,rather than actual amounts,are preferable allocation bases because:

The most widely used methods of support department cost allocations are the:

When estimating the costs of a cost object,direct costs are allocated and indirect costs are traced to the object.

After all manufacturing overhead costs have been assigned to the production departments,the step to assign all manufacturing overhead costs accumulated in a production department to the jobs that the department has worked on is called:

Jasmine Doh is considering using cost drivers that are measured in dollars (rather than physical units)for her company.Your advice is:

The support department cost allocation method that recognises some of the reciprocal services between support departments is called the:

When management elect to calculate the overhead rate using a relatively long period of time,the overhead rate is called a normalised overhead rate.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

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Exam 7: A Closer Look at Overhead Costs

If the relationship between overhead costs and the cost drivers differs substantially across production departments,the firm should use:

The following information about Monfort Manufacturing is available: Using the step-down method and starting with Training Department,the cost allocated from Training Department to Machining Department is:

A cost pool is:

The step/s used in cost allocation include/s:

Prior to allocating overheads to a product,it is necessary to allocate the costs of all support departments to the production departments.

For management accounting purposes,the denominator volume for applying overhead to products may be:

Using the information below,what would be the profit under variable costing and absorption costing,respectively?

The 'direct method' ignores the fact that:

Management would prefer to use either absorption costing or variable costing depending on:

Before any costing process can occur,it is necessary to identify the cost object.

Budgeted amounts of allocation bases,rather than actual amounts,are preferable allocation bases because:

The most widely used methods of support department cost allocations are the:

When estimating the costs of a cost object,direct costs are allocated and indirect costs are traced to the object.

After all manufacturing overhead costs have been assigned to the production departments,the step to assign all manufacturing overhead costs accumulated in a production department to the jobs that the department has worked on is called:

Jasmine Doh is considering using cost drivers that are measured in dollars (rather than physical units)for her company.Your advice is:

The support department cost allocation method that recognises some of the reciprocal services between support departments is called the:

When management elect to calculate the overhead rate using a relatively long period of time,the overhead rate is called a normalised overhead rate.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters