Question 1

Allocation is not necessary when using JIT manufacturing.

Accepted Answer

A) True 
 B)False

Question 2

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

Accepted Answer

A)  sales-value-at-split-off method. 
B)  direct allocation method. 
C)  net realizable value method. 
D)  physical unit method. 
A)  sales-value-at-split-off method. 
B)  direct allocation method. 
C)  net realizable value method. 
D)  physical unit method.

Question 3

A possible causal factor to use when allocating cafeteria costs would be

Accepted Answer

A)  number of square feet. 
B)  number of direct labor hours. 
C)  number of employees. 
D)  appraised value of square footage. 
A)  number of square feet. 
B)  number of direct labor hours. 
C)  number of employees. 
D)  appraised value of square footage.

Question 4

Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows:
   Required:

Accepted Answer

The answer of Arctic Tundra Company has two support departments...

Question 5

Morton Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $13,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $27,000 and $45,000, respectively. Data on standard service hours and number of employees are as follows:
  Predetermined overhead rates for Departments X and Y, respectively, are based on direct labor hours.
What is the overhead rate for Department X assuming the direct method is used?

Accepted Answer

A)  $27.00 
B)  $81.00 
C)  $46.88 
D)  $93.75 
A)  $27.00 
B)  $81.00 
C)  $46.88 
D)  $93.75

Question 6

A single changing rate uses the fixed costs of the support department.

Accepted Answer

A) True 
 B)False

Question 7

Citizens Bank has two bank locations: Main and Suburbs. The central office provides check-processing services for the two banks. Information pertaining to the banks is as follows:
   Required:

Accepted Answer

The answer of Citizens Bank has two bank locations: Main...

Question 8

The following information pertains to Amon Schrock Corporation:   Amon Schrock Corporation does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.
Predetermined overhead rates for fabrication and assembly are based on direct labor hours.
If the direct method is used to allocate support department costs, the predetermined overhead rate for the Fabrication Department (rounded to two decimal places) is

Accepted Answer

A)  $28.80. 
B)  $24.78. 
C)  $7.28. 
D)  $5.40. 
A)  $28.80. 
B)  $24.78. 
C)  $7.28. 
D)  $5.40.

Question 9

Tec-Pro Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows:
  When Tec-Pro uses the sequential method, the support department allocated first is the one with the highest percentage of interdepartmental service. The choice of the department allocated first is determined by the comparison of the following ratio for S1 and S2, respectively:

Accepted Answer

A)  5/50; 1,000/5,000 
B)  5/60; 1,000/5,500 
C)  10/50; 1,000/5,000 
D)  10/55; 500/4,500 
A)  5/50; 1,000/5,000 
B)  5/60; 1,000/5,500 
C)  10/50; 1,000/5,000 
D)  10/55; 500/4,500

Question 10

The weight factor addresses the advantages of the physical units method.

Accepted Answer

A) True 
 B)False

Question 11

The __________ method of allocating costs assumes "step down" interdepartmental services.

Accepted Answer

The answer of The __________ method of allocating costs assumes...

Question 12

If the costs of support departments are NOT allocated to producing departments,

Accepted Answer

A)  product costs would be understated. 
B)  GAAP requirements would not be met. 
C)  managers of producing departments may tend to overconsume services. 
D)  all of the above. 
A)  product costs would be understated. 
B)  GAAP requirements would not be met. 
C)  managers of producing departments may tend to overconsume services. 
D)  all of the above.

Question 13

Fixed support department costs should be allocated based on

Accepted Answer

A)  current actual usage of service. 
B)  current budgeted usage of service. 
C)  practical capacity of user departments. 
D)  all of the above. 
A)  current actual usage of service. 
B)  current budgeted usage of service. 
C)  practical capacity of user departments. 
D)  all of the above.

Question 14

A secondary product recovered during the manufacturing of a primary product during a joint process is called a(n): __________ .
or

Accepted Answer

by-product

Question 15

Astoria Savings & Loans of New York has three revenue-generating departments: Consumer accounts, Commercial accounts, and Loans. The bank also has three service areas: administration, personnel, and accounting. The direct costs per month and the interdepartmental service structure are shown below:   How much cost would be allocated to the Commercial account area from administration using the direct method?

Accepted Answer

A)  $40,000 
B)  $5,000 
C)  $10,000 
D)  $20,000 
A)  $40,000 
B)  $5,000 
C)  $10,000 
D)  $20,000

Question 16

The following information pertains to Longboat Company:   Longboat Company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.
Predetermined overhead rates for fabrication and assembly are based on direct labor hours. (Round amounts to dollars.)
If the direct method is used to allocate support department costs, the predetermined overhead rate for the Fabrication Department (rounded to two decimal places) would be

Accepted Answer

A)  $28.80. 
B)  $24.78. 
C)  $7.28. 
D)  $5.40. 
A)  $28.80. 
B)  $24.78. 
C)  $7.28. 
D)  $5.40.

Question 17

Algonquin Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were $25,000. In addition, 4,000 units of X and 6,000 units of Y were produced. Separable processing costs beyond the split-off point were X-$10,000; Y-$20,000. X sells for $10.00 per unit; Y sells for $7.50 per unit. What is the gross profit of product Y assuming the net realizable value method is used?

Accepted Answer

A)  $45,000 
B)  $16,364 
C)  $13,636 
D)  $30,000 
A)  $45,000 
B)  $16,364 
C)  $13,636 
D)  $30,000

Question 18

Silver Chariots Trucking Company incurred $5,000 of indirect advertising costs for its operations. The following data have been collected for 2014 for its three departments:
   Required:
Determine the costs assigned to each department using the following activity drivers:

Accepted Answer

The answer of Silver Chariots Trucking Company incurred $5,000 of...

Question 19

Support department cost to the producing departments is(are) called:

Accepted Answer

A)  direct materials 
B)  direct labor 
C)  activity driver 
D)  common cost 
A)  direct materials 
B)  direct labor 
C)  activity driver 
D)  common cost

Question 20

Dual rates combine the fixed and variable costs.

Accepted Answer

A) True 
 B)False

Allocation is not necessary when using JIT manufacturing.

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

A possible causal factor to use when allocating cafeteria costs would be

Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Required:

A single changing rate uses the fixed costs of the support department.

Citizens Bank has two bank locations: Main and Suburbs. The central office provides check-processing services for the two banks. Information pertaining to the banks is as follows: Required:

The weight factor addresses the advantages of the physical units method.

The __________ method of allocating costs assumes "step down" interdepartmental services.

If the costs of support departments are NOT allocated to producing departments,

Fixed support department costs should be allocated based on

A secondary product recovered during the manufacturing of a primary product during a joint process is called a(n): __________ . or

Silver Chariots Trucking Company incurred $5,000 of indirect advertising costs for its operations. The following data have been collected for 2014 for its three departments: Required: Determine the costs assigned to each department using the following activity drivers:

Support department cost to the producing departments is(are) called:

Dual rates combine the fixed and variable costs.

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 7: Allocating Costs of Support Departments and Joint Products

Allocation is not necessary when using JIT manufacturing.

A joint cost allocation method that would assign the same amount of cost per unit to two joint products that sell for $10 and $40, respectively, is the

A possible causal factor to use when allocating cafeteria costs would be

Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Required:

A single changing rate uses the fixed costs of the support department.

Citizens Bank has two bank locations: Main and Suburbs. The central office provides check-processing services for the two banks. Information pertaining to the banks is as follows: Required:

The weight factor addresses the advantages of the physical units method.

The __________ method of allocating costs assumes "step down" interdepartmental services.

If the costs of support departments are NOT allocated to producing departments,

Fixed support department costs should be allocated based on

A secondary product recovered during the manufacturing of a primary product during a joint process is called a(n): __________ . or

Silver Chariots Trucking Company incurred $5,000 of indirect advertising costs for its operations. The following data have been collected for 2014 for its three departments: Required: Determine the costs assigned to each department using the following activity drivers:

Support department cost to the producing departments is(are) called:

Dual rates combine the fixed and variable costs.

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters