Module_19_Multiple_Choice_Ans

Module_19_Multiple_Choice_Ans - Module 19 Multiple Choice...

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Module 19 Multiple Choice MC19-1 Allocation Base LO1 Which of the following cost categories would most likely use the price of orders placed with suppliers as its allocation base? Solution d. Purchasing departments often assign costs to production departments based on the value of orders placed by each department. MC19-2 Allocation Base LO1 Which of the following cost categories would most likely use the number of orders placed with suppliers as its allocation base? Solution d. Purchasing departments often assign costs to production departments based on the number of orders placed by each department. MC19-3 Traceability of Costs LO1 Which of the following costs are most difficult to trace to specific units of production or other cost objectives? Solution b. Materials, direct labor, and prime costs (which are materials and direct labor combined) are all directly traceable to production, but indirect costs, by their nature are difficult to trace to products. MC19-4 Elements of Cost Allocation LO1 Which of the following is NOT a key element of any indirect cost allocation system? Solution a. The key elements of a cost allocation system are cost pool, cost objective, and cost allocation base. MC19-5 Cost Allocation Pools LO1 Which of the following are not important considerations in establishing a cost pool? Solution d. Cost allocation pools consist of costs that cannot be traced to cost objectives; hence, the need to allocate these costs. MC19-6 Selecting an Allocation Base LO1 Which of the following is a key consideration in selecting an allocation base? Solution c. The allocation base should be logically associated with the costs in the allocation pool. For instance, building costs logically associate with the amount of building space, which is often used to allocate building costs. MC19-7 Plant-Wide Allocate LO1 ©Cambridge Business Publishers, 2008 st Edition
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Which of the following characteristics is a consequence of the implementation of a plant-wide allocation rate? Solution b. When using a plant-wide rate, variations in costs by departments cannot be reflected in the cost assigned to the various departments. MC19-8 Service Department Cost Allocation LO1 Which of the following consequences would occur if the costs of service departments were NOT allocated to producing departments? Solution d. Items a though c above are all consequences of not assigning service department costs to producing departments. MC19-9 Direct Cost Allocation Method LO2 The following information pertains to Charter Company: Service Departments Producing Departments Personnel Maintenance Fabrication Assembly Budgeted overhead $80,000 $144,000 $280,000 $320,000 Direct labor-hours 4,000 5,000 16,000 20,000 Machine-hours 24,000 16,000 Number of employees 8 10 30 50 Charter Company does not divide costs into fixed and variable components. Personnel costs are
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Module_19_Multiple_Choice_Ans - Module 19 Multiple Choice...

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