ch14 - Cost Accounting, 13e (Horngren et al.) Chapter 14...

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Cost Accounting, 13e (Horngren et al.) Chapter 14 Cost Allocation, Customer-Proftability Analysis, and Sales-Variance Analysis 1) Indirect costs are costs that cannot be traced to cost objects in an economically feasible way. Answer: TRUE Dif: 1 Terms : cost allocation Objectiv e: 1 AACSB: ReFective thinking 2) To motivate engineers to design simpler products, costs for production, distribution, and customer service may be included in product-cost estimates. Answer: TRUE Dif: 2 Terms : cost allocation Objectiv e: 1 AACSB: ReFective thinking 3) One of the purposes of allocating indirect costs is to justify costs or compute reimbursement amounts. Answer: TRUE Dif: 2 Terms : cost allocation Objectiv e: 1
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1 AACSB: Refective thinking 4) For external reporting, inventoriable costs under GAAP sometimes include R&D costs. Answer: FALSE Explanatio n: Under GAAP, inventoriable costs include only the costs of producing and sometimes the design costs of the product. DiF: 2 Terms : cost allocation Objectiv e: 1 AACSB: Refective thinking 5) To allocate a cost, it must satisfy all four purposes for which costs are allocated. Answer: FALSE Explanatio n: To allocate a cost, it is only necessary to satisfy one of the purposes for which costs are allocated. DiF: 2 Terms : cost allocation Objectiv e: 1 AACSB: Refective thinking 6) Today, companies are simplifying their cost systems and moving toward less-detailed and less-complex cost allocation bases. Answer: 2
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FALSE Explanatio n: Companies are moving toward more-detailed and more-complex cost allocations because today technology can capture these costs in a relatively inexpensive manner. Dif: 3 Terms : cost allocation Objectiv e: 2 AACSB: ReFective thinking 3
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7) Using the benefts received criterion, the costs are allocated among the benefciaries in proportion to the benefts each receives. Answer: TRUE Dif: 3 Terms : cost allocation Objectiv e: 2 AACSB: ReFective thinking 8) Under the Fairness criterion, cost allocation is not viewed as a reasonable means oF establishing a selling price. Answer: ±ALSE Explanatio n: Cost allocation is viewed as a Fair way to set a selling price between two contracting parties. Dif: 3 Terms : cost allocation Objectiv e: 2 AACSB: Ethical reasoning 9) When using the cause-and-e²ect criterion, cost drivers are selected as the cost allocation bases. Answer: TRUE Dif: 1 Terms : cost allocation Objectiv e: 2 4
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AACSB: Refective thinking 10) The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation. Answer: FALSE Explanatio n: The cause-and-eFect or bene±ts-received criteria is considered superior when the purpose of cost allocation is motivation. DiF: 2 Terms : cost allocation Objectiv e: 2 AACSB: Refective thinking 11) The bene±ts of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-bene±t approach.
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ch14 - Cost Accounting, 13e (Horngren et al.) Chapter 14...

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