chapter 11- service department and joint cost allocation -...

Cost Accounting & Cost Concepts Cost Accounting & Cost Concepts Cost Accounting
Instructions: Write the letter that best corresponds to your answer. Do not write on the test questions and
return it after use. Thank you and GODBLESS!
1.
The support department allocation method that is the most widely used because of its simplicity is the
a. step-down method.
b. reciprocal allocation method.
c. direct allocation method.
d. sequential allocation method.
Answer: c Difficulty: 1 Objective: 3
2.
The method that allocates costs by explicitly including all the services rendered among all support
departments is
Difficulty: 2 Objective: 3
3.
Under which allocation method are one-way reciprocal support services recognized?
Difficulty: 2 Objective: 3
4.
The direct allocation method
Difficulty: 3 Objective: 3
5.
The step-down allocation method
a. typically begins with the support department that provides the highest percentage of its total
services to other support departments.
b. recognizes the total amount of services that support departments provide to each other.
c. allocates complete reciprocated costs.
d. offers key input for outsourcing decisions.
Answer: a Difficulty: 3 Objective: 3
Cost Accounting: Chapter 7- Job Order Costing 1

Cost Accounting & Cost Concepts Cost Accounting & Cost Concepts Cost Accounting
6.
The reciprocal allocation method
Difficulty: 3 Objective: 3
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 49 THROUGH 51.
Jake’s Battery Company has two service departments, Maintenance and Personnel. Maintenance
Department costs of P160,000 are allocated on the basis of budgeted maintenance-hours. Personnel
Department costs of P40,000 are allocated based on the number of employees. The costs of operating
departments A and B are P80,000 and P120,000, respectively. Data on budgeted maintenance-hours and
number of employees are as follows:
Support Departments Production Departments
Maintenance
Department
Personnel
Department
A B
Budgeted costs P160,000 P40,000 P80,000 P120,000
Budgeted maintenance-