Question 1

What is the complete reciprocated cost of the Personnel Department?

Accepted Answer

A) $92,500 
B) $93,803 
C) $80,000 
D) $105,000 
E) $165,634 
A) $92,500 
B) $93,803 
C) $80,000 
D) $105,000 
E) $165,634

Question 2

Which of the following criteria subsidizes poor performers at the expense of the best performers?

Accepted Answer

A) ability to bear 
B) benefit received 
C) causality 
D) fairness and equity 
E) benefits expended 
A) ability to bear 
B) benefit received 
C) causality 
D) fairness and equity 
E) benefits expended

Question 3

The reciprocal method of support department cost allocation is the most precise method and therefore is widely adopted.

Accepted Answer

A) True 
 B)False

Question 4

The dual-rate cost allocation method classifies costs into two pools,a budgeted cost pool and an actual cost pool.

Accepted Answer

A) True 
 B)False

Question 5

Answer the following question(s)using the information below:
The Fancy Flier Airplane Corporation has a central materials laboratory.The laboratory has only two users,the Large Plane Department and the Small Plane Department.The following data apply to the coming budget year:
   Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours.
-If a dual-rate cost allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.

Accepted Answer

A) $782,500 
B) $817,500 
C) $822,500 
D) $705,000 
E) $996,923 
A) $782,500 
B) $817,500 
C) $822,500 
D) $705,000 
E) $996,923

Question 6

Use the information below to answer the following question(s).
General Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review.
  
-What is the fixed cost per year and the variable cost per hour,respectively,for the General Media Cassette Division using the dual-rate method,assuming that the allocation bases are capacity for fixed costs and budgeted capacity for variable costs?

Accepted Answer

A) $720,000 and $360 
B) $720,000 and $400 
C) $765,958 rounded and $400 
D) $765,958 rounded and $360 
E) $900,000 and $400 
A) $720,000 and $360 
B) $720,000 and $400 
C) $765,958 rounded and $400 
D) $765,958 rounded and $360 
E) $900,000 and $400

Question 7

List three benefits from the careful costing of combinations of quantities of products and services in bundled products.

Accepted Answer

Any three of:
1.More accurate costing re

Question 8

Two entities,Burch Company and Carey Company,share a common warehouse facility.Total costs for the facility are budgeted at $1,000,000.Accountants have estimated that if Burch Company did not use the facility the cost incurred would be reduced by 30 percent.
What amount of the budgeted cost should be allocated,respectively,to Burch and Carey if the incremental allocation method is used?

Accepted Answer

A) $0;$700,000 
B) $0;$1,000,000 
C) $198,000;$802,000 
D) $300,000;$700,000 
E) $700,000;$300,000 
A) $0;$700,000 
B) $0;$1,000,000 
C) $198,000;$802,000 
D) $300,000;$700,000 
E) $700,000;$300,000

Question 9

An advantage of the single-rate method is that it is easier and always the most accurate cost-allocation choice.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following question(s)using the information below:
The Fancy Flier Airplane Corporation has a central materials laboratory.The laboratory has only two users,the Large Plane Department and the Small Plane Department.The following data apply to the coming budget year:
   Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours.
-If a single-rate cost allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume actual usage is used to allocate copying costs.

Accepted Answer

A) $1,057,500 
B) $822,500 
C) $763,750 
D) $705,000 
E) $1,476,923 
A) $1,057,500 
B) $822,500 
C) $763,750 
D) $705,000 
E) $1,476,923

Question 11

Which of the following is NOT a common criteria used to guide decisions related to cost allocations?

Accepted Answer

A) ability to bear 
B) benefit received 
C) causality 
D) fairness and equity 
E) stable market prices 
A) ability to bear 
B) benefit received 
C) causality 
D) fairness and equity 
E) stable market prices

Question 12

What is the complete reciprocated cost of the Maintenance Department?

Accepted Answer

A) $165,634 
B) $163,333 
C) $150,000 
D) $0 
E) $93,803 
A) $165,634 
B) $163,333 
C) $150,000 
D) $0 
E) $93,803

Question 13

The narrower the scope of service provided by,for example,R&D,the more important it is to allocate costs proportionately to the benefits received by the internal users.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following does NOT apply to support departments?

Accepted Answer

A) A support department is not an operating department. 
B) Support departments create special accounting problems when they provide reciprocal support to each other. 
C) An example of a support department would be a personnel department. 
D) To obtain accurate product costs requires the inclusion of support department costs. 
E) Direct support costs are always traced,indirect support department costs are allocated. 
A) A support department is not an operating department. 
B) Support departments create special accounting problems when they provide reciprocal support to each other. 
C) An example of a support department would be a personnel department. 
D) To obtain accurate product costs requires the inclusion of support department costs. 
E) Direct support costs are always traced,indirect support department costs are allocated.

Question 15

Fixed cost allocation rates should be determined using

Accepted Answer

A) past production capacity. 
B) short-term average usage. 
C) short-term expected usage. 
D) long-term expected usage. 
E) actual usage. 
A) past production capacity. 
B) short-term average usage. 
C) short-term expected usage. 
D) long-term expected usage. 
E) actual usage.

Question 16

One of the important aspects about the dual-rate method is that it allows managers to see how variable and fixed costs behave differently.

Accepted Answer

A) True 
 B)False

Question 17

When budgeted cost allocation rates are used,variations in actual usage by one division affect the costs allocated to other divisions.

Accepted Answer

A) True 
 B)False

Question 18

Rainier Manufacturing Company uses the step-down method for allocating its support department costs to operating departments.The overhead costs of support Department A are to be allocated first,followed by the costs of B,and then those of C.The distribution of services is as follows:
   
Required:
a.Calculate the percentage of B's costs that should be allocated to Y.
b.Calculate the percentage of C's costs that should be allocated to B.

Accepted Answer

a.Department A's costs have already been

Question 19

An advantage to using budgeted usage,rather than actual usage,for the allocation base is that

Accepted Answer

A) GAAP/IFRS requires it for comparability to previous years. 
B) variable costs are lower. 
C) management does not have to be accountable for actual costs since the system only deals with budgeted costs. 
D) it is consistent with a short-run time horizon. 
E) user divisions will know their allocated costs in advance. 
A) GAAP/IFRS requires it for comparability to previous years. 
B) variable costs are lower. 
C) management does not have to be accountable for actual costs since the system only deals with budgeted costs. 
D) it is consistent with a short-run time horizon. 
E) user divisions will know their allocated costs in advance.

Question 20

The step-down allocation method allows partial recognition of services rendered by support departments to other support departments.

Accepted Answer

A) True 
 B)False

What is the complete reciprocated cost of the Personnel Department?

Which of the following criteria subsidizes poor performers at the expense of the best performers?

The reciprocal method of support department cost allocation is the most precise method and therefore is widely adopted.

The dual-rate cost allocation method classifies costs into two pools,a budgeted cost pool and an actual cost pool.

List three benefits from the careful costing of combinations of quantities of products and services in bundled products.

An advantage of the single-rate method is that it is easier and always the most accurate cost-allocation choice.

Which of the following is NOT a common criteria used to guide decisions related to cost allocations?

What is the complete reciprocated cost of the Maintenance Department?

The narrower the scope of service provided by,for example,R&D,the more important it is to allocate costs proportionately to the benefits received by the internal users.

Which of the following does NOT apply to support departments?

Fixed cost allocation rates should be determined using

One of the important aspects about the dual-rate method is that it allows managers to see how variable and fixed costs behave differently.

When budgeted cost allocation rates are used,variations in actual usage by one division affect the costs allocated to other divisions.

An advantage to using budgeted usage,rather than actual usage,for the allocation base is that

The step-down allocation method allows partial recognition of services rendered by support departments to other support departments.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 14: Period Cost Allocation

What is the complete reciprocated cost of the Personnel Department?

Which of the following criteria subsidizes poor performers at the expense of the best performers?

The reciprocal method of support department cost allocation is the most precise method and therefore is widely adopted.

The dual-rate cost allocation method classifies costs into two pools,a budgeted cost pool and an actual cost pool.

List three benefits from the careful costing of combinations of quantities of products and services in bundled products.

An advantage of the single-rate method is that it is easier and always the most accurate cost-allocation choice.

Which of the following is NOT a common criteria used to guide decisions related to cost allocations?

What is the complete reciprocated cost of the Maintenance Department?

The narrower the scope of service provided by,for example,R&D,the more important it is to allocate costs proportionately to the benefits received by the internal users.

Which of the following does NOT apply to support departments?

Fixed cost allocation rates should be determined using

One of the important aspects about the dual-rate method is that it allows managers to see how variable and fixed costs behave differently.

When budgeted cost allocation rates are used,variations in actual usage by one division affect the costs allocated to other divisions.

An advantage to using budgeted usage,rather than actual usage,for the allocation base is that

The step-down allocation method allows partial recognition of services rendered by support departments to other support departments.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters