Question 1

Because Fenwick Company has significant swings in its monthly production, the best way to allocate its plant manager's $58,000 annual salary is to allocate 1/12th of the cost each month.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

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.E) None of the above
F) B) and D)

Question 3

Overhead costs:

Accepted Answer

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.E) None of the above
F) A) and B)

Question 4

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Accepted Answer

A) True 
 B)False

Question 5

Overhead costs include:

Accepted Answer

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

Question 6

A predetermined overhead rate is calculated using estimated or predicted cost and volume data.

Accepted Answer

A) True 
 B)False

Question 7

Jiminez Company paid its annual property tax of $12,400 on its manufacturing facility in January. The company expects to make 4,000 units of product during the year. During January, 700 units of product were produced. Based on this information: (Do not round intermediate calculations.)

Accepted Answer

A)   $2,170 of the property tax cost should be allocated to the January production.
B)   $1,033 of the property tax cost should be allocated to the January production.
C)   $3,100 of the property tax cost should be assigned to the January production.
D)   $12,400 of the property tax cost should be allocated to the January production.E) B) and D)
F) B) and C)

Question 8

Cost allocation involves:

Accepted Answer

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.E) All of the above
F) A) and D)

Question 9

Alleghany Community College operates four departments. The square footage used by each department is shown below.   Department Square Footage  Accounting 3,000 Marketing 4,000 Technology 6,000 Sciences 3,000‾ Total 16,000‾\begin{array}{lc}	ext { Department }&	ext {Square Footage }\	ext { Accounting } & 3,000 \	ext { Marketing } & 4,000 \	ext { Technology } & 6,000 \	ext { Sciences } &  \underline{3,000}\	ext { Total }& \underline{16,000}\end{array} Department  Accounting  Marketing  Technology  Sciences  Total ​Square Footage 3,0004,0006,0003,000​16,000​​  Alleghany's annual building rental cost is $320,000.
What amount of rent expense should be allocated to the Technology Department?

Accepted Answer

A)   $60,000
B)   $80,000
C)   $120,000
D)   $192,000 E) A) and C)
F) All of the above

Question 10

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Accepted Answer

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.E) A) and C)
F) All of the above

Question 12

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,600,000 to maintain its railroad track. Pertinent data for the two divisions are as follows:Total Miles Traveled:   Western Division 860,000miles Pacific Division 1,260,000miles\begin{array}{lr}	ext { Western Division } & 860,000 \mathrm{miles} \	ext { Pacific Division } & 1,260,000 \mathrm{miles}\end{array} Western Division  Pacific Division ​860,000miles1,260,000miles​ 
 The amount of track improvement cost that should be allocated to the Western Division is: (Round intermediate calculation to 2 decimal places.)

Accepted Answer

A)   $5,819,333.
B)   $3,491,600.
C)   $4,300,000.
D)   $860,000. E) B) and C)
F) B) and D)

Question 13

Allocation of costs to various cost objects may:

Accepted Answer

A)   affect managers' performance evaluation.
B)   affect the overall profitability of a company.
C)   affect the apparent profitability of the various products a company makes.
D)   affect managers' performance evaluation and the apparent profitability of the various products a company makes.E) A) and C)
F) C) and D)

Question 14

A cost pool should be made up of costs with a common cost object.

Accepted Answer

A) True 
 B)False

Question 15

Overhead costs include:

Accepted Answer

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

Question 16

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:

Accepted Answer

A)   Square footage occupied.
B)   Machine hours.
C)   Direct labor hours.
D)   Units sold.E) B) and D)
F) All of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Alleghany Community College operates four departments. The square footage used by each department is shown below.   Department  Square Footage  Accounting 4,000 Marketing 5,000 Technology 7,000 Sciences 4,000‾Total20,000‾\begin{array}{lc}	ext { Department } & 	ext { Square Footage }\	ext { Accounting } & 4,000 \	ext { Marketing } & 5,000 \	ext { Technology } & 7,000 \	ext { Sciences } & \underline{4,000}\	ext {Total}&\underline{20,000}\end{array} Department  Accounting  Marketing  Technology  Sciences Total​ Square Footage 4,0005,0007,0004,000​20,000​​  Alleghany's annual building rental cost is $250,000.
What amount of rent expense should be allocated to the Technology Department? (Do not round intermediate calculations.)

Accepted Answer

A)   $50,000
B)   $62,500
C)   $87,500
D)   $250,000 E) B) and C)
F) All of the above

Question 19

At the beginning of the year, Rangle Company expected to incur $58,000 of overhead costs in producing 5,800 units of product. The direct material cost is $24 per unit of product. Direct labor cost is $34 per unit. During January, 540 units were produced. The total cost of the units made in January was:

Accepted Answer

A)   $31,320
B)   $5,400
C)   $36,720
D)   None of the answers are correct.E) None of the above
F) All of the above

Question 20

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?

Accepted Answer

A)   Direct and variable
B)   Direct and fixed
C)   Indirect and variable
D)   Indirect and fixedE) All of the above
F) A) and B)

Exam 12: Cost Accumulation, Tracing, and Allocation

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Correct Answer
verified

Overhead costs include:

Correct Answer
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Correct Answer
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Correct Answer
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Overhead costs:

Correct Answer
verified

A predetermined overhead rate is calculated using estimated or predicted cost and volume data.

Correct Answer
verified

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:

Correct Answer
verified

Jiminez Company paid its annual property tax of $12,400 on its manufacturing facility in January. The company expects to make 4,000 units of product during the year. During January, 700 units of product were produced. Based on this information: (Do not round intermediate calculations.)

Correct Answer
verified

Cost allocation involves:

Correct Answer
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Correct Answer
verified

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

Correct Answer
verified

Overhead costs include:

Correct Answer
verified

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?

Correct Answer
verified

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Correct Answer
verified

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?

Correct Answer
verified

Correct Answer
verified

A cost pool should be made up of costs with a common cost object.

Correct Answer
verified

Because Fenwick Company has significant swings in its monthly production, the best way to allocate its plant manager's $58,000 annual salary is to allocate 1/12^th of the cost each month.

Correct Answer
verified

Allocation of costs to various cost objects may:

Correct Answer
verified

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Correct Answer
verified

Exam 12: Cost Accumulation, Tracing, and Allocation

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Correct AnswerverifiedShow Answer

Overhead costs include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Overhead costs:

Correct AnswerverifiedShow Answer

A predetermined overhead rate is calculated using estimated or predicted cost and volume data.

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Jiminez Company paid its annual property tax of $12,400 on its manufacturing facility in January. The company expects to make 4,000 units of product during the year. During January, 700 units of product were produced. Based on this information: (Do not round intermediate calculations.)

Correct AnswerverifiedShow Answer

Cost allocation involves:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Overhead costs include:

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The terms "cost tracing" and "cost allocation" may be used interchangeably because they mean the same thing.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A cost pool should be made up of costs with a common cost object.

Correct AnswerverifiedShow Answer

Because Fenwick Company has significant swings in its monthly production, the best way to allocate its plant manager's $58,000 annual salary is to allocate 1/12th of the cost each month.

Correct AnswerverifiedShow Answer

Allocation of costs to various cost objects may:

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Because Fenwick Company has significant swings in its monthly production, the best way to allocate its plant manager's $58,000 annual salary is to allocate 1/12^th of the cost each month.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified