Chap010 - Chapter 10 - Managing and Allocating...

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Chapter 10 - Managing and Allocating Support-Service Costs Chapter 10 Managing and Allocating Support-Service Costs True / False Questions 1. Support-service department costs are usually facility-level resource decisions. TRUE AACSB FN: Measurement Difficulty: Easy Learning Objective: 1 2. Without allocation of service department costs to users, service departments will tend to grow uncontrollably. TRUE AACSB FN: Measurement Difficulty: Easy Learning Objective: 1 3. Few companies allocate the cost of corporate headquarters to divisions because the allocations cause low morale for employees. FALSE AACSB BB: Resource Management Difficulty: Easy Learning Objective: 1 4. If internal customers are required to use internal services, they might spend valuable time negotiating and lobbying over fair prices, resulting in internal inefficiencies. TRUE AACSB BB: Resource Management Difficulty: Easy Learning Objective: 1 10-1
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Chapter 10 - Managing and Allocating Support-Service Costs 5. Using multiple cost pools usually results in better decisions about the use of service resources than single cost pools. TRUE AACSB FN: Measurement Difficulty: Easy Learning Objective: 2 6. Using fewer cost pools will generally result in cost allocations that match resource use better than using multiple cost pools. FALSE AACSB FN: Measurement Difficulty: Easy Learning Objective: 2 7. An advantage of the Activity-Based-Costing approach to developing cost pools is that it is cheaper and easier to apply than traditional methods. FALSE AACSB FN: Measurement Difficulty: Easy Learning Objective: 2 8. In order for allocations to be fair to all departments, all resources should be allocated to user departments, whether or not they were consumed by the departments. FALSE AACSB: Reflective Thinking ACIPA BB: Resource Management Difficulty: Easy Learning Objective: 2 10-2
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Chapter 10 - Managing and Allocating Support-Service Costs 9. The use of support-service department resources is not necessarily the same as the supply of those resources. TRUE AACSB: Reflective Thinking ACIPA BB: Resource Management Difficulty: Medium Learning Objective: 2 10. The space occupied by a department would be an appropriate cost allocation base for allocating the cost of the accounting department to other departments. FALSE AACSB: Reflective Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 11. The number of employees in a department would be an appropriate cost allocation base of allocating the Personnel Department cost to other departments. TRUE AACSB: Reflective Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 12. Square footage occupied would be an appropriate way to allocate building insurance cost to user departments. TRUE AACSB: Reflective Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 10-3
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Chapter 10 - Managing and Allocating Support-Service Costs 13. Occupancy related support-service costs are most appropriately allocated using a space occupied type of cost-allocation base.
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Chap010 - Chapter 10 - Managing and Allocating...

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