ACC561 10 Final Questions A+ Work-12 - 23046

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41) The preferred guidelines for allocating service department costs include _____.
A. evaluating performance using allocated costs for each service department
B. establishing part or all of the details regarding cost allocation in advance of rendering the service
C. allocating variable- and fixed-cost pools simultaneously
D. identifying the direct and indirect costs

42) _____ is not a type of cost allocation.
A. Reallocation of costs from service departments to production departments
B. Allocation of costs of a particular organizational unit to products or services
C. Reallocation of costs from production departments to service departments
D. Allocation of costs to the appropriate organizational unit

43) Kevin Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is _____.
A. $72,000
B. $31,500
C. $105,000
D. $42,000

44) Murphy Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Mixing is _____.
A. $58,500
B. $63,000
C. $78,000
D. $31,500

45) Serena Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12     24     32
If the step-down method is used to allocate costs and the Maintenance Department is allocated first, then the amount of overhead that would be allocated from Maintenance to Finishing is _____.
A. $31,500
B. $57,000
C. $47,250
D. $42,750

46) When the variable costing method is used, fixed factory overhead appears on the income statement as a_____.
A. fixed expense
B. production-volume variance
C. component of cost of goods sold and as a production-volume variance
D. component of cost of goods sold

47) _____ is (are) used for external reporting.
A. Absorption costing
B. Variable costing
C. Absorption costing and variable costing
D. Direct costing

48) In absorption costing, costs are separated into the major categories of_____.
A. manufacturing and nonmanufacturing
B. manufacturing and fixed
C. variable and nonmanufacturing
D. fixed and variable

49) _____ is the first step in designing a management control system.
A. Evaluating management's performance
B. Establishing organizational goals
C. Distinguishing between profit centers and cost centers
D. Preparing financial statements

50) _____ is (are) the most basic component of a management control system.
A.The organization's long-range budget
B.The organization's goals
C.Top management's preferences
D.The stockholder's preferences

51) Identify which of the following is not a characteristic of a management control system.
A.A management control system aids and coordinates the process of making decisions.
B.A management control system encourages short term profitability.
C.A management control system coordinates forecasting sales and cost driver activities, budgeting, and measuring and evaluating performance.
D.A management control system motivates individuals throughout the organization to act in concert.

52) Jewel Company's revenues are $300 and invested capital is $240. Expenses are currently 60% of sales. Jewel Company's current return on investment is _____.
A. 50%
B. 100%
C. none of these answers are correct
D. 80%

53) The following information is available for the Peter Company:
Sales     $500,000
Invested Capital     312,500
ROI     10%
The return on sales is _____.
A. 10.000%
B. none of these answers is correct
C. 6.250%
D. 1.000%

54) The following information is available for the Peter Company:
Sales     $150,000
Invested Capital     156,250
ROI     10%
The return on sales is _____.
A. 10.00%
B. none of these answers is correct
C. 10.42%
D. 62.50%

 

 

 

 

 

Solution Description

41) The preferred guidelines for allocating service department costs include _____.
A. evaluating performance using allocated costs for each service department
B. establishing part or all of the details regarding cost allocation in advance of rendering the service
C. allocating variable- and fixed-cost pools simultaneously
D. identifying the direct and indirect costs

42) _____ is not a type of cost allocation.
A. Reallocation of costs from service departments to production departments
B. Allocation of costs of a particular organizational unit to products or services
C. Reallocation of costs from production departments to service departments
D. Allocation of costs to the appropriate organizational unit

43) Kevin Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:
     Maintenance     Personnel     Mixing     Finishing
Direct dept. costs     $126,000     $84,000     $105,000     $175,000
Square footage     800     400     1,600     1,200
Number of employees     8     12&