240 correct answer c homogenous cost pools are those

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240. Correct answer c. Homogenous cost pools are those in which all of the costs have the same or similar cause-and-effect or benefits received relationship with the cost allocation base.
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144 241. Correct answer b. The Tool Department overhead applied to Job #231 is $197.50 calculated as follows. Tooling overhear per hour: $8,690 ÷ 440 hrs. = $19.75 Job #231 overhead: $19.75 x 10 hrs. = $197.50 242. Correct answer c. The overhead applied to a job incurring 20 hours of direct labor is $140 as shown below. Total budgeted direct labor hours: $50,000 ÷ $5 = 10,000 hrs. Overhead cost/direct labor hour: $70,000 ÷ 10,000 = $7 per hr. Overhead cost for 20 hours: 20 x $7 = $140 243. Correct answer b. Statements I and IV would apply. The factory overhead rate is likely increased as expenses such as depreciation have increased. The increase in automation makes it more difficult to respond to economic changes as the company cannot simply layoff or hire workers. Statements II and III are incorrect as machine hours would be more appropriate and Haney will still be able to calculate labor variances. 244. Correct answer d. Allocation on the basis of the number of employees would have the least negative impact on the Financial Consulting Division as the division has only 28% of the total employees while it has 30% of revenues and 30% of variable expenses. 245. Correct answer c. The engineering cost per unit of Product B is $15 calculated as follows. Engineering cost per order: $300,000 ÷ (12 +18) = $10,000 Engineering cost per Product B: $10,000 x 18 = $180,000 Cost per unit of Product B: $180,000 ÷ 12,000 = $15.00 246. Correct answer d. The dual-rate cost-allocation method classifies costs in each cost pool into two subcost pools, a variable-cost subpool and a fixed cost subpool, with each of these subpools having a different cost allocation base. 247. Correct answer d. If the cost of legal services is allocated on the basis of usage, departments will be very careful about usage. To encourage usage, the cost should be absorbed as a corporate expense. 248. Correct answer a. Allocating service department costs to production departments is most likely to cause production managers to be more careful about the use of services and not request excessive service. 249. Correct answer a. Depending on the step-down sequence used, different allocation of support departments to operating departments will result. Therefore, the correct response is direct and reciprocal methods only. 250. Correct answer d. The reciprocal method of departmental allocation explicitly includes the mutual services provided among all support departments. Therefore, the Information Systems Department would be allocated all users including the Personnel Department.
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145 251. Correct answer b. The general step-down sequence begins with the support department that renders the greatest amount of service. There, the Personnel Department would be first and the Information Systems Department would not be allocated to the Personnel Department.
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