Question 1

Which of the following statements best describes cost allocation?

Accepted Answer

A) A company can maximize or minimize total company income by selecting different bases on which to allocate indirect costs. 
B) A company should select an allocation base to raise or lower reported income on given products. 
C) A company's total income will remain unchanged no matter how indirect costs are allocated. 
D) A company,as a general rule,should allocate indirect costs randomly or based on an "ability-to-bear" criterion. 
A) A company can maximize or minimize total company income by selecting different bases on which to allocate indirect costs. 
B) A company should select an allocation base to raise or lower reported income on given products. 
C) A company's total income will remain unchanged no matter how indirect costs are allocated. 
D) A company,as a general rule,should allocate indirect costs randomly or based on an "ability-to-bear" criterion.

Question 2

A method for allocating joint-process costs is based on

Accepted Answer

A) opportunity costs. 
B) outlay costs. 
C) indirect costs. 
D) net realizable value. 
A) opportunity costs. 
B) outlay costs. 
C) indirect costs. 
D) net realizable value.

Question 3

Useful Tool Company
Useful Tool Company has two service departments (General Factory and Repair)and two operating departments (Fabrication and Assembly).Management has decided to allocate repair costs on the basis of the area (square feet)in each department and to allocate General Factory on the basis of labor hours worked by the employees in each of their respective departments.
The following data appear in the company records for the current period:
   
The company allocates the costs from the General Factory Department first.
Refer to the Useful Tool Company.Using the step method,what is the total amount of costs allocated to (a)the Fabrication Department and (b)the Assembly Department?

Accepted Answer

(a)& (b)

Question 4

Stephanie Company
Stephanie Company has two production departments: D and J.Stephanie also has 3 service departments: Personnel,Administration,and Shipping.Shipping costs are allocated on the basis of number of packages,while Personnel and Administration costs are allocated using number of employees.Assume that the ranking of the benefits provided is in the order listed below.
 
Refer to Stephanie Company.Using the direct method,what amount of personnel costs is allocated to Department J (rounded to the nearest $)?

Accepted Answer

A) $120,000 
B) $240,000 
C) $300,000 
D) $360,000 
A) $120,000 
B) $240,000 
C) $300,000 
D) $360,000

Question 5

Which of the following is a reason for using activity-based costing to allocate service department costs?

Accepted Answer

A) It results in identifying more accurate cost drivers. 
B) It is required by generally accepted accounting principles. 
C) It is required by the tax authorities. 
D) All of the answers are correct. 
A) It results in identifying more accurate cost drivers. 
B) It is required by generally accepted accounting principles. 
C) It is required by the tax authorities. 
D) All of the answers are correct.

Question 6

Which of the following is the method of allocating joint costs based on a physical measure of volume,weight,or any other common measure of physical characteristics?

Accepted Answer

A) absolute quantities method. 
B) physical qualities method. 
C) physical quantities method. 
D) absolute qualities method. 
A) absolute quantities method. 
B) physical qualities method. 
C) physical quantities method. 
D) absolute qualities method.

Question 7

Why bother allocating joint-process costs?

Accepted Answer

A) It is a performance measurement. 
B) It is used for determining and responding to regulatory rate changes. 
C) It is used in estimating casualty losses. 
D) All of the answers are correct. 
A) It is a performance measurement. 
B) It is used for determining and responding to regulatory rate changes. 
C) It is used in estimating casualty losses. 
D) All of the answers are correct.

Question 8

Applying the techniques of activity-based costing typically results in identifying which of the following?

Accepted Answer

A) less accurate cost-allocation bases (cost drivers). 
B) as accurate cost-allocation bases (cost drivers). 
C) more accurate cost-allocation bases (cost drivers). 
D) None of the answers is correct. 
A) less accurate cost-allocation bases (cost drivers). 
B) as accurate cost-allocation bases (cost drivers). 
C) more accurate cost-allocation bases (cost drivers). 
D) None of the answers is correct.

Question 9

Garfield Company has two production departments and a maintenance department.In addition,the company keeps other costs for the general plant in a separate account.The estimated cost data for Year 1 follow:
   
The general plant services the three departments in the following proportions: 50 percent (Department 1);30 percent (Department 2);20 percent (Maintenance).
Required:
Allocate maintenance costs based on maintenance hours.Allocate maintenance department and general plant costs to the production departments.Use the step method,starting with general plant costs.

Accepted Answer

(Allocating overhead. )
 @#IMG-DLM&_TB2144_00 (a)T

Question 10

What is the third,or final,step in allocating service department costs to production departments?

Accepted Answer

A) Assign overhead costs that are directly attributable to a service or production department. 
B) Allocate other overhead costs based on appropriate cost drivers. 
C) Allocate service department costs to production departments. 
D) None of the answers is correct. 
A) Assign overhead costs that are directly attributable to a service or production department. 
B) Allocate other overhead costs based on appropriate cost drivers. 
C) Allocate service department costs to production departments. 
D) None of the answers is correct.

Question 11

Stephanie Company
Stephanie Company has two production departments: D and J.Stephanie also has 3 service departments: Personnel,Administration,and Shipping.Shipping costs are allocated on the basis of number of packages,while Personnel and Administration costs are allocated using number of employees.Assume that the ranking of the benefits provided is in the order listed below.
 
Refer to Stephanie Company.Using the step method,what amount of Personnel costs is allocated to Department J (rounded to the nearest $)?

Accepted Answer

A) $ 73,171 
B) $105,263 
C) $157,895 
D) $240,000 
A) $ 73,171 
B) $105,263 
C) $157,895 
D) $240,000

Question 12

Which of the following is a reason for using activity-based costing to allocate service department costs?

Accepted Answer

A) It can lead to improved allocation of service department costs to production departments. 
B) It is required by generally accepted accounting principles. 
C) It is required by the tax authorities. 
D) All of the answers are correct. 
A) It can lead to improved allocation of service department costs to production departments. 
B) It is required by generally accepted accounting principles. 
C) It is required by the tax authorities. 
D) All of the answers are correct.

Question 13

The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the

Accepted Answer

A) absolute quantities method. 
B) physical qualities method. 
C) physical quantities method. 
D) absolute qualities method. 
A) absolute quantities method. 
B) physical qualities method. 
C) physical quantities method. 
D) absolute qualities method.

Which of the following statements best describes cost allocation?

A method for allocating joint-process costs is based on

Which of the following is a reason for using activity-based costing to allocate service department costs?

Which of the following is the method of allocating joint costs based on a physical measure of volume,weight,or any other common measure of physical characteristics?

Why bother allocating joint-process costs?

Applying the techniques of activity-based costing typically results in identifying which of the following?

What is the third,or final,step in allocating service department costs to production departments?

Which of the following is a reason for using activity-based costing to allocate service department costs?

The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Filters

Exam 13: Allocating Costs to Responsibility Centers

Which of the following statements best describes cost allocation?

A method for allocating joint-process costs is based on

Which of the following is a reason for using activity-based costing to allocate service department costs?

Which of the following is the method of allocating joint costs based on a physical measure of volume,weight,or any other common measure of physical characteristics?

Why bother allocating joint-process costs?

Applying the techniques of activity-based costing typically results in identifying which of the following?

What is the third,or final,step in allocating service department costs to production departments?

Which of the following is a reason for using activity-based costing to allocate service department costs?

The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Filters