Exercise__2A[1] - Give Perfect Reasons for all Theory &...

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practicals. ____ 1. Which of the following types of costs are easily tracked or traced and assigned to a specific job in a job order costing system? a. Factory utilities b. Factory supervisor c. Factory assembly-line worker d. Lubricants used on factory machinery Reason: The cost of factory assembly line worker can directly be associated with the job work on which he is working ____ 2. Costs associated with factory insurance, maintenance, rent, property taxes, and other similar items are typically included in manufacturing overhead and assigned to products: a. primarily based on whatever technique is easiest b. based on a related cost driver that can be identified and measured c. if not treated as a period cost d. based on the relative sales revenue generated by the product Reason: Allocating the factory overheads based on the cost drivers under ABC is the best method to ensure that the manufacturing overheads are being applied to the jobs or products as per the amount of activities that they are performing. ____ 3. Cost allocation: a. is most often used for direct material costs. b. is most often used for manufacturing overhead costs. c. is most often used for direct labor costs. d. is most often used for nonmanufacturing costs. Reason: Generally manufacturing overheads includes those costs that are common to all and therefore there is a need to allocate those costs on an appropriate basis. ____ 4. Which of the following costs is the most likely to not be allocated to a product in a job costing environment? a. Indirect materials b. Factory maintenance c. Factory utilities d. Direct labor Reason: Direct Labor is not allocated but directly assigned to the product. ____ 5. Which of the following statements is true with respect to cost drivers? a. Overhead costs should only have one cost driver. b. In labor intensive companies, direct labor hours often serves as the cost driver. c. When using a cost driver, the same amount of overhead will be allocated to
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all products. d. Cost drivers are often used to allocate machine hours. Reason: This is most near to the correctness in respect of the cost drivers. The rest of the statements are incorrect. There can be several cost drivers for various overheads, machine hours is not the only basis in selecting the cost drivers. There could be many basis for the cost drivers to be selected. ____ 6. Carla's Bakery has recently expanded its operations to include private-party catering. Prior to this expansion, Carla used a plantwide overhead rate with machine hours as the cost driver. Now, due to the expansion, Carla would like to implement departmental overhead rates. She will continue to use machine hours as the cost driver for the bakery division but will use direct labor hours for the catering division. The following is a breakdown of product costs and other data for the two divisions for the month of May: Bakery Catering Direct labor hours
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Exercise__2A[1] - Give Perfect Reasons for all Theory &...

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