Deck 4: Cost Accumulation,Tracing,and Allocation

Question 1

Blankenship Company operates a factory with two departments,X and Y.The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:

A) Square footage occupied.
B) Machine hours.
C) Direct labor hours.
D) Units sold.

Answer 1

A
Feedback:

Question 2

Which of the following costs generally can be traced directly to units of product?

A) Indirect materials
B) Overhead costs
C) Assembly labor
D) Indirect materials and assembly labor

Answer 2

C
Feedback: The cost object is the unit of product.Direct costs,such as assembly labor,can be traced to the unit of product in a cost-effective manner.Indirect costs are also called overhead costs.

Question 3

Which of the following statements is

A) The salary is a fixed cost that is directly traceable to the cost of making hamburgers.
B) The salary is a variable cost that is directly traceable to the cost of operating a specific restaurant.
C) The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant.
D) None of the answers are correct.

Answer 3

D
Feedback: Direct costs can be traced to cost objects in a cost-effective manner.The salary is a fixed cost that cannot be directly traced to the cost of making hamburgers.

Question 4

Which of the following is not an example of a cost object and its related cost driver? $\begin{array}{|l|l|l|} \hline & {\text { Cost Obiect }} & {\text { Cost Driver }} \\\hline A.&\text { Rent } & \text { Square feet } \\\hline \text { B. } & \text { Transportation } & \text { Miles driven } \\\hline \text { C. } & \text { Direct labor hours } & \text { Indirect labor } \\\hline \text { D. } & \text { Utilities } & \text { Machine hours }\\\hline \end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 5

Overhead costs:

A) Cannot be traced to cost objects in a cost-effective manner,but are instead allocated to cost objects.
B) Cannot be allocated to cost objects.
C) Are always variable costs.
D) Are only incurred by manufacturing companies.

Question 6

Cost allocation involves:

A) Identifying a cost driver for each cost to be allocated.
B) Calculating an allocation rate for each cost to be allocated.
C) Multiplying the allocation rate by the weight of the cost driver.
D) All of the answers are correct.

Question 7

Cost objects may be:

A) Products.
B) Services.
C) Departments.
D) All of the answers are correct.

Question 8

Managers of a discount store chain are considering whether to add a new auto service department.In reaching this decision,the managers should consider:

A) Direct costs only.
B) Both direct and indirect costs.
C) Neither direct nor indirect costs.
D) Indirect costs but not direct costs.

Question 9

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

A) Such costs cannot be traced to objects in a cost-effective manner.
B) Such practice results in a more accurate accumulated cost for the object.
C) Generally accepted accounting principles require some costs to be treated as indirect.
D) All of the answers are correct.

Question 10

Southeast Manufacturing Company has identified the following cost objects: Cost Object 1: The cost of operating the finishing department
Cost Object 2: The cost of a particular product made in June
Cost Object 3: The cost of operating the factory
With respect to these cost objects,the cost of the salary of the supervisor of the finishing department is directly traceable to cost objects:

A) 1 and 2.
B) 2 and 3.
C) 1 and 3.
D) 1,2,and 3.

Question 11

Which of the following statements is

A) Indirect costs can easily be traced to a cost object;direct costs cannot be easily traced to a cost object.
B) Both direct and indirect costs can easily be traced to a cost object.
C) Neither direct nor indirect costs are easily traced to a cost object.
D) Direct costs can be traced easily to a cost object,but indirect costs cannot be easily traced to a cost object.

Question 12

A chair manufacturer makes custom chairs using hand tools,wood,glue,and varnish.Which of the following statements is

A) The costs of wood and glue would be treated as direct costs.
B) Wood,glue,and varnish would all be direct materials.
C) Wood would be accounted for as a direct cost,and glue and varnish as indirect costs.
D) The concepts of direct and indirect costs are not applicable here.

Question 13

Select the incorrect statement from the following.

A) The difference between a direct cost and an indirect cost is that a direct cost relates to a given cost object while an indirect cost does not.
B) Actual costs are useful for evaluating managerial performance.
C) Actual costs are not relevant in many decisions because actual costs cannot be determined until after the decision has been made.
D) When accumulating the cost of a specific cost object,the indirect costs are allocated to the cost object.

Question 14

Overhead costs include:

A) Direct and indirect costs.
B) Indirect costs only.
C) Direct costs only.
D) Neither direct nor indirect costs.

Question 15

Select the

A) Only direct costs are traced to cost objects.
B) The same cost may be assigned to more than one cost object.
C) General,selling,and administrative costs cannot be assigned to a cost object.
D) A given cost can be driven by more than one cost driver.

Question 16

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

A) The cost of heating and air conditioning.
B) The cost of supplies.
C) The cost of the department manager's salary.
D) Rent on the store building.

Question 17

Cost accumulation is used to:

A) Determine the cost of a particular cost object.
B) Identify and estimate opportunity costs.
C) Identify fixed and variable costs.
D) Set the selling price for a service.

Question 18

Preston Company has three divisions.The company should consider a cost to be a direct cost of a division if:

A) It meets guidelines imposed by generally accepted accounting principles.
B) It can be traced to a division in a cost-effective manner.
C) It is a variable cost.
D) It can be allocated to a division.

Question 19

Cobalt Company management has identified the following cost objects: Cost Object 1: The cost of operating the finishing department
Cost Object 2: The cost of operating the factory
Cost Object 3: The cost of a particular product made in June
With respect to these cost objectives,how would rent paid by the finishing department for storage space be classified? $\begin{array}{lll} &\underline {\text { Object } 1}& \underline {\text { Object } 2}& \underline {\text { Object } 3}\\A. &\text { Direct } & \text { Direct } & \text { Direct } \\B.&\text { Direct } & \text { Direct } & \text { Indirect } \\C.&\text { Indirect } & \text { Indirect } & \text { Indirect } \\ D.&\text { Indirect } & \text { Indirect } & \text { Direct }\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 20

Craig Manufacturing Company operates its three production departments within a single facility.Each department produces its own products and maintains its own production equipment.Although they share a common facility,each department is overseen by a separate supervisor.Which one of the following costs is a direct cost of each department?

A) Lease payment on facility
B) Depreciation on the facility
C) Production supervisor salary
D) Plant manager salary

Question 21

Sheddon Industries produces two products.The products' identified costs are as follows: $\begin{array}{|l|c|l|}\hline & \text { Product A } & \text { Product B } \\\hline \text { Direct matenals } & \$ 20,000 & \$ 15,000 \\\hline \text { Direct labor } & 12,000 & 24,000 \\\hline\end{array}$ The company's overhead costs of $108,000 are allocated based on direct labor cost.Assume 4,000 units of product A and 5,000 units of Product B are produced.What is the cost per unit for product B? (Do not round your intermediate calculations. )

A) $7.80
B) $22.20
C) $16.80
D) None of the answers are correct.

Question 22

Humphries Cons

A) Labor hours
B) Direct material costs
C) Number of warehouses completed
D) Square footage of the warehouses

Question 23

For a manufacturer,measures of volume may include:

A) Number of units produced.
B) Number of square feet occupied.
C) Amount of direct materials used in production.
D) Both number of units produced and amount of direct materials used in production are correct.

Question 24

Jessup Company expects to incur overhead costs of $20,000 per month and direct production costs of $125 per unit.The estimated production activity for the upcoming year is 1,000 units.If the company desires to earn a gross profit of $50 per unit,the sales price per unit would be which of the following amounts?

A) $175
B) $195
C) $415
D) $290

Question 25

Bank's Department Store has three departments: Men's,Women's and Children's.The store incurred $50,000 of store rental costs during the current year.The departments identified the following cost drivers: $\begin{array}{|l|r|r|r|}\hline & \text { Men's } & \text { Women's } & \text { Children's } \\\hline \text { Labor dollars } & \$ 530,000 & \$ 775,000 & \$ 240,000 \\\hline \text { Number of employees } & 10 & 20 & 4 \\\hline \text { Square footage } & 3,000 & 8,000 & 1,000 \\\hline \text { Number of sales transactions } & 300,000 & 900,000 & 90,000 \\\hline\end{array}$ Using the most appropriate cost driver,how much rental cost (rounded to the nearest dollar)should be allocated to the Women's Department? (Do not round your intermediate calculations. )

A) $33,333
B) $29,412
C) $25,081
D) $34,884

Question 26

At the beginning of the year,Barcroft Co.estimated that its total annual fixed overhead costs would amount to $25,000.Further,Barcroft estimated that its volume of production would be 2,000 units of product.Based on these estimates,Barcroft computed a predetermined overhead rate that was used to allocate overhead costs to the products made during the year.As predicted,actual fixed overhead costs did amount to $25,000.However,actual volume of production amounted to 2,200 units of product.Based on this information alone:

A) Products were costed accurately during the year.
B) Products were overcosted during the year.
C) Products were undercosted during the year.
D) The answer cannot be determined from the information provided.

Question 27

Marsden Company has three departments occupying the following amount of floor space: $\begin{array}{|l|l|}\hline \text { Department 1 } & 15,000 \mathrm{sq.ft} \\\hline \text { Department 2 } & 10,000 \mathrm{sq.ft} \\\hline \text { Department 3 } & 25,000 \mathrm{sq.ft} \\\hline\end{array}$ How much store rent should be allocated to Department 3 if total rent is equal to $200,000? (Do not round your intermediate calculations. )

A) $100,000
B) $50,000
C) $66,667
D) None of the answers are correct.

Question 28

At the beginning of the year,Rangle Company expected to incur $54,000 of overhead costs in producing 6,000 units of product.The direct material cost is $20 per unit of product.Direct labor cost is $30 per unit.During January,600 units were produced.The total cost of the units made in January was:

A) $30,000
B) $5,400
C) $35,400
D) None of the answers are correct.

Question 29

Selection of a cost driver depends on:

A) The availability of information for both the cost and the potential cost driver.
B) A cause-and-effect relationship between the cost driver and the cost.
C) Judgment of management.
D) All of the answers are correct.

Question 30

Great Outdoors Company makes two types of camping tents.Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor.During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents.Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours.Based on this information:

A) $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
B) $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
C) $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent.
D) None of the answers are correct.

Question 31

The process of dividing a total cost into parts and assigning it to cost objects is known as:

A) cost tracing.
B) cost division.
C) cost allocation.
D) None of the answers are correct.

Question 32

Which of the following statements is

A) Both direct and indirect costs can be assigned to a cost object.
B) Cost drivers are often selected based on the availability of information.
C) Volume measures are good drivers for fixed overhead costs.
D) Fixed costs that do not have a definitive cost driver are allocated using an allocation base that distributes a rational share of the cost to each product.

Question 33

During the current year,Kemp Cons

A) Number of homes built during the month.
B) Number of months in the year.
C) Number of homes built during the year.
D) Size of the home.

Question 34

Sheddon Industries produces two products.The products' identified costs are as follows: $\begin{array}{|l|c|l|}\hline & \text { Product A } & \text { Product B } \\\hline \text { Direct matenals } & \$ 20,000 & \$ 15,000 \\\hline \text { Direct labor } & 12,000 & 24,000 \\\hline\end{array}$ The company's overhead costs of $108,000 are allocated based on labor cost.Assume 4,000 units of product A and 5,000 units of Product B are produced.What amount of production costs would be assigned to Product A? (Do not round your intermediate calculations. )

A) $36,000
B) $111,000
C) $68,000
D) None of the answers are correct.

Question 35

Which of the following is not a step in allocating indirect costs to cost objects?

A) Multiply the allocation rate by the weight of the cost driver.
B) Trace direct costs to individual cost pools.
C) Compute an allocation rate by dividing the total cost to be allocated by the total cost driver volume.
D) All of the answers are steps in allocating indirect costs.

Question 36

Select the correct statement from the following.

A) The allocation base determines whether a cost is classified as direct or indirect.
B) The same cost cannot be classified as both direct and indirect.
C) Relevant costs can include direct and indirect costs.
D) Direct costs always display a variable behavior pattern.

Question 37

The Flintstone Cons

A) $21,818
B) $30,000
C) $2,000
D) None of the answers are correct.

Question 38

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year.It is estimated that these employees move 600,000 pounds of material per year.If 60,000 pounds are moved in March,how much of the material handling cost should be assigned to products made in March? (Do not round your intermediate calculations. )

A) $36,000
B) $24,000
C) $50,000
D) $38,000

Question 39

State University's College of Business is divided into three departments,accounting,marketing,and management.Relevant information for each department is provided below: $\begin{array}{|l|l|l|l|}\hline \text { Cost Driver } & \text { Accounting } & \text { Marketing } & \text { Management } \\\hline \text { Number of students } & 700 & 400 & 200 \\\hline \begin{array}{l}\text { Number of classes per } \\\text { semester }\end{array} & 32 & 18 & 14 \\\hline \text { Number of faculty } & 10 & 12 & 5 \\\hline\end{array}$ The Dean of the College of Business is trying to assign funds from the operating budget to the three departments.Assuming that the chair of each department is trying to attain the highest funding possible for his/her department,which of the following most accurately describes the allocation base that each chair will favor?

A) The chair of the Management department will want to use the number of classes while the chair of the Marketing department will prefer the number of faculty.
B) The chair of the Accounting department and the chair of the Management department will want to use the number of faculty.
C) The chair of the Marketing department will want to use number of students,while the chair of the Accounting department will want to use number of classes per semester.
D) The chair of the Accounting department will want to use number of students while the chair of the Management department will want to use number of faculty.

Question 40

The Western and Pacific Railroad has two divisions,the Western Division and the Pacific Division.The company recently invested $8,000,000 to maintain its railroad track.Pertinent data for the two divisions are as follows: Total Miles Traveled: $\begin{array}{|l|l|}\hline \text { Western Division } & 800,000 \text { miles } \\\hline \text { Pacific Division } & 1,200,000 \text { miles } \\\hline\end{array}$ The amount of track improvement cost that should be allocated to the Western Division is: (Do not round your intermediate calculations. )

A) $4,000,000.
B) $3,200,000.
C) $800,000.
D) $5,333,333.

Question 41

Joint products A and B emerge from common processing that costs $200,000 and yields 2,000 units of Product A and 1,000 units of Product B.Product A can be sold for $100 per unit.Product B can be sold for $120 per unit.How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values? (Do not round your intermediate calculations. )

A) $75,000
B) $125,000
C) $100,000
D) $133,333

Question 42

Pets 'n Pals is attempting to determine the cost of operating a particular store.Which of the following costs would be classified as an indirect cost?

A) Fees paid to external accountant for corporate audit
B) Cost of operating company owned vehicles by the store
C) Salary of store manager
D) Cost of aquariums used to display exotic fish

Question 43

Joint products A and B emerge from common processing that costs $150,000 and yields 8,000 units of Product A and 4,000 units of Product B.Product A can be sold for $100 per unit.Product B can be sold for $80 per unit.What amount of the joint costs will be assigned to Product B if joint costs are allocated on the basis of number of units produced? (Do not round your intermediate calculations. )

A) $42,857
B) $66,667
C) $50,000
D) $100,000

Question 44

Using the step method of allocating service department costs,the costs are allocated to:

A) service departments only.
B) operating departments only.
C) both service departments and operating departments.
D) neither service departments nor operating departments.

Question 45

In an organization,departments that have tasks leading to the primary objectives of the organization are:

A) service departments.
B) operating departments.
C) primary departments.
D) strategic departments

Question 46

Danforth Manufacturing Company uses a cost-plus pricing strategy.At the beginning of the year,Danforth estimated that total annual fixed overhead costs would amount to $60,000.Further,Danforth estimated that the annual volume of production would be 1,000 units of product.Based on these estimates,Danforth computed a predetermined overhead rate that was used to allocate overhead cost to the products made throughout the year.As predicted,the actual volume of production amounted to 1,000 units of product.However,actual fixed overhead costs amounted to $56,000.Based on this information alone:

A) a lower than appropriate selling price was assigned to products during the year.
B) a higher than appropriate selling price was assigned to products during the year.
C) the correct selling price was assigned to products during the year.
D) the answer cannot be determined from the information provided.

Question 47

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the supervisory salaries be classified?

A) Direct and variable
B) Direct and fixed
C) Indirect and variable
D) Indirect and fixed

Question 48

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.During the upcoming,the company expects to make 2,000 comforters.With respect to the comforters how would the fabric used to make the comforters be classified?

A) Direct and variable
B) Direct and fixed
C) Indirect and variable
D) Indirect and fixed

Question 49

Michael & Co.expects overhead costs of $60,000 per month and direct production costs of $24 per unit.The estimated production activity for the current accounting period is as follows: $\begin{array}{|l|l|l|l|l|}\hline & 1^{st} \text { Quarter } &2^{nd} \text { Quarter } & 3^{nd}\text { Quarter } &4^{th} \text { Quarter } \\\hline \text { Unats produced } & 11,500 & 9,000 & 8,250 & 11,250 \\\hline\end{array}$ The predetermined overhead rate based on units produced is (rounded to the nearest penny)is:

A) $1.50 per unit.
B) $2.67 per unit.
C) $18.00 per unit.
D) $42.00 per unit.

Question 50

Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis.At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated.Based on this information alone:

A) The correct amount of cost was assigned to products during the accounting period.
B) Too much cost was assigned to products during the accounting period.
C) Too little cost was assigned to products during the accounting period.
D) The answer cannot be determined from the information provided.

Question 51

The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:

A) direct method.
B) indirect method.
C) weighted average method.
D) step method.

Question 52

In an organization,departments that provide support to operating departments are called:

A) service departments.
B) primary departments.
C) operating departments.
D) strategic departments.

Question 53

Financial reporting standards require that joint costs:

A) Be treated as a period cost and expensed immediately.
B) Be assigned to the product produced in the largest quantity.
C) Be assigned to the product with the highest sales value.
D) Be allocated to the two or more joint products.

Question 54

Using the direct method of allocating service department costs,the costs are allocated to:

A) operating departments only.
B) service departments only.
C) both operating departments and service departments.
D) neither operating departments nor service departments.

Question 55

Which of the following is not a

A) Costs that have been pooled for one purpose may require disaggregation for a different purpose.
B) Pooling costs that have different cost drivers may result in unreliable cost allocation.
C) A single cost pool will have more than one cost driver for different cost objects.
D) Pooled costs may require disaggregation when allocating costs for different purposes.

Question 56

A factor having a "cause and effect" relationship with a cost object is called a(n):

A) cost driver
B) allocation base
C) direct cost
D) indirect cost

Question 57

Which of the following is not a joint product with the other products listed?

A) Cheese
B) Cream
C) Butter
D) Eggs

Question 58

In a manufacturing company,service department costs are:

A) reported as selling and administrative expenses.
B) allocated to the products made by the company.
C) treated as direct costs.
D) expensed when incurred.

Question 59

Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.The company expects to make 2,000 comforters during the current year.With respect to the comforters,how would the wages of sewing machine operators be classified?

A) Direct and variable
B) Direct and fixed
C) Indirect and variable
D) Indirect and fixed

Question 60

Jiminez Company paid its annual property tax of $6,000 on its manufacturing facility in January.The company expects to make 4,000 units of product during the year.During January,300 units of product were produced.Based on this information:

A) $450 of the property tax cost should be allocated to the January production.
B) $1,500 of the property tax cost should be allocated to the January production.
C) $6,000 of the property tax cost should be assigned to the January production.
D) $500 of the property tax cost should be allocated to the January production.

Question 61

Assume that a factory seeks to allocate rent to several departments that occupy the factory.The factory is occupied by all the departments.Which of the following is the most logical cost driver for allocating the factory rent?

A) Number of employees
B) Square footage occupied by each department
C) Machine hours
D) Number of labor hours in each department

Question 62

A manager believes that the number of units sold drives the company's selling costs.The number of units sold would be referred to as the cost driver.

Question 63

Joint products are:

A) easily traced to products.
B) similar products that result from a common process.
C) different products that result from a common process.
D) different products that are combined to create a single product.

Question 64

Which of the following regarding direct costs is a correct statement?

A) Direct costs are always fixed costs.
B) Direct costs are always variable costs.
C) Direct costs are easily traced to cost objects.
D) Direct costs are never selling and administrative expenses.

Question 65

All of the following are examples of indirect costs that can be classified as being variable costs except:

A) Utilities.
B) Material handling costs.
C) Production supervisor salaries.
D) Transportation costs.

Question 66

Which formula best represents the first step used to allocate an indirect cost to a cost object?

A) Total cost to be allocated divided by cost driver
B) Cost driver divided by allocation rate
C) Cost driver divided by total cost to be allocated
D) Allocation rate divided by total cost to be allocated

Question 67

Alleghany Community College operates four departments.The square footage used by each department is shown below. $\begin{array}{|l|r|}\hline {\text { Department }} & \text { Square Footage } \\\hline \text { Accounting } & 3,000 \\\hline \text { Marketing } & 4,000 \\\hline \text { Technology } & 6,000 \\\hline \text { Sciences } & 3,00 0 \\\hline {\text { Total }} & 16,000 \\\hline\end{array}$ Alleghany's annual building rental cost is $320,000 What amount of rent expense that should be allocated to the Sciences Department?

A) $60,000
B) $80,000
C) $120,000
D) $106,667

Question 68

Alleghany Community College operates four departments.The square footage used by each department is shown below. $\begin{array}{|l|r|}\hline {\text { Department }} & \text { Square Footage } \\\hline \text { Accounting } & 3,000 \\\hline \text { Marketing } & 4,000 \\\hline \text { Technology } & 6,000 \\\hline \text { Sciences } & 3,000 \\\hline \text { Total } & \mathbf{1 6 , 0 0 0} \\\hline\end{array}$ Alleghany's annual building rental cost is $320,000. What amount of rent expense that should be allocated to the Technology Department?

A) $60,000
B) $80,000
C) $120,000
D) $192,000

Question 69

Which of the followings statements is correct regarding direct and indirect costs?

A) Direct costs cannot easily be traced to a cost object,whereas indirect costs can be easily traced to a cost object.
B) Direct costs can be easily traced to a cost object,whereas indirect costs cannot be easily traced to a cost object.
C) Direct costs are always relevant to a particular cost decision,whereas indirect costs are never relevant to a cost decision.
D) Direct costs are never relevant to a particular cost decision,whereas indirect costs are always relevant to a cost decision.

Question 70

Indirect costs are often pooled,and not allocated individually because:

A) individual allocation would be more timely.
B) individual allocation would be more accurate.
C) individual allocation would be tedious.
D) the benefits of individual allocation of indirect costs are greater than the costs.

Question 71

Nature's Soap manufactures Bar soap and Liquid soap.Of the following costs,which would be an indirect cost to the Liquid Department?

A) Liquid manager's salary
B) Manufacturing plant insurance
C) Depreciation of the liquefying equipment
D) Liquid Fragrance

Question 72

Which of the following best describes the term used to assign indirect costs to a cost object?

A) Cost tracing
B) Cost allocation
C) Cost assignment
D) Cost accumulation

Question 73

The first step in cost accumulation is to identify cost objects.

Question 74

Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following should not be treated as direct costs,assuming the cost object is individual clocks?

A) The clock face
B) The timing mechanism for each clock
C) Wood
D) Depreciation on clock-making equipment

Question 75

The following are Acme's production costs for the quarter ended September 30^th:
$\begin{array}{|l|l|}\hline \text { Direct materials } & \$ 150,000 \\\hline \text { Direct labor } & \$ 175,000 \\\hline \text { Factory overhead } & \$ 225,000 \\\hline\end{array}$ What amount of costs should be traced to specific products in the process?

A) $150,000
B) $175,000
C) $225,000
D) $325,000

Question 76

Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?

A) Number of employees
B) Number of customers
C) Square footage of office space
D) Either number of employees or square footage of office space depending on the nature of the indirect cost

Question 77

Which of the following is not an important factor in determining the appropriate cost driver to use in allocating a cost?

A) A cause-and-effect relationship between the cost and the cost driver
B) The availability of information about the cost and cost driver
C) The ability of the cost driver to allocate indirect costs to cost objects
D) All of the answers are important factors in determining the appropriate cost driver to use in allocating a cost

Question 78

The accuracy of managerial accounting information usually is more important than timeliness.

Question 79

Sturbridge Company manufactures fine furniture and grandfather clocks.Sturbridge has an excellent reputation,and each grandfather clock sells for several thousand dollars.Which of the following is an indirect cost,assuming the cost object is the Clock Department?

A) Salary of the clock production supervisor
B) Depreciation on the factory building
C) Depreciation on clock-making equipment
D) All of the answers are correct.

Question 80

The split off point:

A) is the point at which production of joint products begins.
B) is the point at which joint products become unidentifiable.
C) refers to the point where title to goods sold passes from the seller to the buyer.
D) is the point at which joint products separated from each other.