Question 1

Cost accumulation is used to:

Accepted Answer

A)  Determine the cost of a particular cost object. 
B)  Identify and estimate opportunity costs. 
C)  Identify fixed and variable costs. 
D)  Set the selling price for a service. 
A)  Determine the cost of a particular cost object. 
B)  Identify and estimate opportunity costs. 
C)  Identify fixed and variable costs. 
D)  Set the selling price for a service.

Question 2

Danforth Manufacturing Company uses a cost-plus pricing strategy. At the beginning of the year, Danforth estimated that total annual fixed overhead costs would amount to $60,000. Further, Danforth estimated that the annual volume of production would be 1,000 units of product. Based on these estimates, Danforth computed a predetermined overhead rate that was used to allocate overhead cost to the products made throughout the year. As predicted, the actual volume of production amounted to 1,000 units of product. However, actual fixed overhead costs amounted to $56,000. Based on this information alone:

Accepted Answer

A)  a lower than appropriate selling price was assigned to products during the year. 
B)  a higher than appropriate selling price was assigned to products during the year. 
C)  the correct selling price was assigned to products during the year. 
D)  the answer cannot be determined from the information provided. 
A)  a lower than appropriate selling price was assigned to products during the year. 
B)  a higher than appropriate selling price was assigned to products during the year. 
C)  the correct selling price was assigned to products during the year. 
D)  the answer cannot be determined from the information provided.

Question 3

Indicate whether each of the following statements is true or false.

Accepted Answer

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Question 4

Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?

Accepted Answer

A)  Salary of the clock production supervisor 
B)  Depreciation on the factory building 
C)  Depreciation on clock-making equipment 
D)  All of the answers are correct. 
A)  Salary of the clock production supervisor 
B)  Depreciation on the factory building 
C)  Depreciation on clock-making equipment 
D)  All of the answers are correct.

Question 5

Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:

Accepted Answer

A)  $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made. 
B)  $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made. 
C)  $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent. 
D)  None of the answers are correct. 
A)  $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made. 
B)  $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made. 
C)  $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent. 
D)  None of the answers are correct.

Question 6

Cobalt Company management has identified the following cost objects: Cost Object 1: The cost of operating the finishing department
Cost Object 2: The cost of operating the factory
Cost Object 3: The cost of a particular product made in June
With respect to these cost objectives, how would rent paid by the finishing department for storage space be classified?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 7

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,000,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled:
  The amount of track improvement cost that should be allocated to the Western Division is: (Do not round intermediate calculations.)

Accepted Answer

A)  $4,000,000. 
B)  $3,200,000. 
C)  $800,000. 
D)  $5,333,333. 
A)  $4,000,000. 
B)  $3,200,000. 
C)  $800,000. 
D)  $5,333,333.

Question 8

Allegheny Community College operates four departments. The square footage used by each department is shown below.   Allegheny's annual building rental cost is $320,000
What amount of rent expense that should be allocated to the Sciences Department?

Accepted Answer

A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $106,667 
A)  $60,000 
B)  $80,000 
C)  $120,000 
D)  $106,667

Question 9

Indicate whether each of the following statements is true or false.

Accepted Answer

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Question 10

Overhead costs include:

Accepted Answer

A)  Direct and indirect costs. 
B)  Indirect costs only. 
C)  Direct costs only. 
D)  Neither direct nor indirect costs. 
A)  Direct and indirect costs. 
B)  Indirect costs only. 
C)  Direct costs only. 
D)  Neither direct nor indirect costs.

Question 11

Indicate whether each of the following statements is true or false.

Accepted Answer

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Question 12

The process of dividing a total cost into parts and assigning it to cost objects is known as:

Accepted Answer

A)  cost tracing. 
B)  cost division. 
C)  cost allocation. 
D)  None of the answers are correct. 
A)  cost tracing. 
B)  cost division. 
C)  cost allocation. 
D)  None of the answers are correct.

Question 13

Cost objects may be:

Accepted Answer

A)  Products. 
B)  Services. 
C)  Departments. 
D)  All of the answers are correct. 
A)  Products. 
B)  Services. 
C)  Departments. 
D)  All of the answers are correct.

Question 14

Which of the following is not a step in allocating indirect costs to cost objects?

Accepted Answer

A)  Multiply the allocation rate by the weight of the cost driver. 
B)  Trace direct costs to individual cost pools. 
C)  Compute an allocation rate by dividing the total cost to be allocated by the total cost driver volume. 
D)  All of the answers are steps in allocating indirect costs. 
A)  Multiply the allocation rate by the weight of the cost driver. 
B)  Trace direct costs to individual cost pools. 
C)  Compute an allocation rate by dividing the total cost to be allocated by the total cost driver volume. 
D)  All of the answers are steps in allocating indirect costs.

Question 15

Sheddon Industries produces two products. The products' identified costs are as follows:   The company's overhead costs of $108,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product B? (Do not round your intermediate calculations.)

Accepted Answer

A)  $7.80 
B)  $22.20 
C)  $16.80 
D)  None of the answers are correct. 
A)  $7.80 
B)  $22.20 
C)  $16.80 
D)  None of the answers are correct.

Question 16

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Accepted Answer

A)  The cost of heating and air conditioning. 
B)  The cost of supplies. 
C)  The cost of the department manager's salary. 
D)  Rent on the store building. 
A)  The cost of heating and air conditioning. 
B)  The cost of supplies. 
C)  The cost of the department manager's salary. 
D)  Rent on the store building.

Question 17

Blanton Company wishes to allocate rent expense of $24,000 to its three operating departments, A, B, and C. Assuming the three departments occupy 10,000, 20,000 and 30,000 square feet respectively, the cost allocation rate for Department C is $0.80 per square foot.

Accepted Answer

A) True 
 B)False

Question 18

A cost object is anything for which management desires a separate tracking of costs, while a cost driver is the factor that causes the cost object to increase or decrease.

Accepted Answer

A) True 
 B)False

Question 19

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Accepted Answer

A)  Such costs cannot be traced to objects in a cost-effective manner. 
B)  Such practice results in a more accurate accumulated cost for the object. 
C)  Generally accepted accounting principles require some costs to be treated as indirect. 
D)  All of the answers are correct. 
A)  Such costs cannot be traced to objects in a cost-effective manner. 
B)  Such practice results in a more accurate accumulated cost for the object. 
C)  Generally accepted accounting principles require some costs to be treated as indirect. 
D)  All of the answers are correct.

Question 20

Bank's Department Store has three departments: Men's, Women's and Children's. The store incurred $50,000 of store rental costs during the current year. The departments identified the following cost drivers:   Using the most appropriate cost driver, how much rental cost should be allocated to the Women's Department? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

Accepted Answer

A)  $33,333 
B)  $29,412 
C)  $25,081 
D)  $34,884 
A)  $33,333 
B)  $29,412 
C)  $25,081 
D)  $34,884

Cost accumulation is used to:

Indicate whether each of the following statements is true or false.

Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?

Allegheny Community College operates four departments. The square footage used by each department is shown below. Allegheny's annual building rental cost is $320,000 What amount of rent expense that should be allocated to the Sciences Department?

Indicate whether each of the following statements is true or false.

Overhead costs include:

Indicate whether each of the following statements is true or false.

The process of dividing a total cost into parts and assigning it to cost objects is known as:

Cost objects may be:

Which of the following is not a step in allocating indirect costs to cost objects?

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Blanton Company wishes to allocate rent expense of $24,000 to its three operating departments, A, B, and C. Assuming the three departments occupy 10,000, 20,000 and 30,000 square feet respectively, the cost allocation rate for Department C is $0.80 per square foot.

A cost object is anything for which management desires a separate tracking of costs, while a cost driver is the factor that causes the cost object to increase or decrease.

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

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Exam 12: Cost Accumulation, Tracing, and Allocation

Cost accumulation is used to:

Indicate whether each of the following statements is true or false.

Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?

Allegheny Community College operates four departments. The square footage used by each department is shown below. Allegheny's annual building rental cost is $320,000 What amount of rent expense that should be allocated to the Sciences Department?

Indicate whether each of the following statements is true or false.

Overhead costs include:

Indicate whether each of the following statements is true or false.

The process of dividing a total cost into parts and assigning it to cost objects is known as:

Cost objects may be:

Which of the following is not a step in allocating indirect costs to cost objects?

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Blanton Company wishes to allocate rent expense of $24,000 to its three operating departments, A, B, and C. Assuming the three departments occupy 10,000, 20,000 and 30,000 square feet respectively, the cost allocation rate for Department C is $0.80 per square foot.

A cost object is anything for which management desires a separate tracking of costs, while a cost driver is the factor that causes the cost object to increase or decrease.

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters