Question 1

A system in which an organization purchases materials and parts and produces components just when they are needed in the production process.

Accepted Answer

The answer of A system in which an organization purchases...

Question 2

If the step-down method is used and the costs of the service department with the greatest total cost are allocated first, Department B costs allocated to Department D would be

Accepted Answer

A)  $36,923. 
B)  $30,463. 
C)  $24,615. 
D)  $21,450.

Question 3

County Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage, while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
 
-If the direct method is used to allocate costs, the total cost of the Finishing Department after allocation would be

Accepted Answer

A)  $30,857. 
B)  $27,429. 
C)  $158,286. 
D)  $100,000.

Question 4

Stanley Corp. manufactures two models of its roasting pans, a standard and a deluxe model. Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information:
 
-If activity-based costing is used, then the total cost of the components used in the deluxe model would be

Accepted Answer

A)  $3,455. 
B)  $27,636. 
C)  $48,364. 
D)  $76,000.

Question 5

Stumbo Company has two production departments, Cutting and Assembling, served by one maintenance department. Budgeted fixed costs for the maintenance department for 20X3 were $60,000, and the variable cost per labour hour was $2.00. Other relevant data for 20X3 are as follows:
  Actual maintenance department costs for 20X3 were $64,000 fixed and $120,000 variable.
S1U1P1*S1S1P0in labour hours
-The amount of variable maintenance costs allocated to the Cutting Department should be

Accepted Answer

A)  $80,000. 
B)  $96,000. 
C)  $64,000. 
D)  $83,333.

Question 6

Stohr Company has two departments, New and Old. Central costs are allocated to the two departments in various ways. Relevant information is presented below:
 
-If total advertising expense is $120,000 and it is allocated on the basis of sales, the amount allocated to the Old Department should be

Accepted Answer

A)  $90,000. 
B)  $36,000. 
C)  $100,000. 
D)  $ 20,000.

Question 7

Stanley Corp. manufactures two models of its roasting pans, a standard and a deluxe model. Three activities have been identified as cost drivers and the related costs pooled together to arrive at the following information:
 
-If activity-based costing is used, then the total amount of overhead allocated to the deluxe model would be

Accepted Answer

A)  $45,670. 
B)  $74,330. 
C)  $120,000. 
D)  $ 80,000.

Question 8

County Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage, while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
 
-If the step-down method is used to allocate costs, and the Personnel Department renders the greatest service, then the total cost of the Finishing Department after allocation would be

Accepted Answer

A)  $100,000. 
B)  $158,288. 
C)  $159,571. 
D)  $157,429.

Exam 5: Cost Allocation and Activity-Based Costing Systems

A system in which an organization purchases materials and parts and produces components just when they are needed in the production process.

If the step-down method is used and the costs of the service department with the greatest total cost are allocated first, Department B costs allocated to Department D would be

Stohr Company has two departments, New and Old. Central costs are allocated to the two departments in various ways. Relevant information is presented below: -If total advertising expense is $120,000 and it is allocated on the basis of sales, the amount allocated to the Old Department should be