ACC561 10 Final Questions A+ Work-7 - 23040

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

42) The use of budgeted service department cost rates protects using departments from _____.
A. all of these answers are correct
B. service outages
C. service department efficiencies
D. price fluctuations

43) 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. $78,000
B. $63,000
C. $31,500
D. $58,500

44) Martinez 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 $50,400 $33,600 $42,000 $5,600
Square footage 1,600 800 3,200 2,400
Number of employees 16 24 48 64

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 Personnel to Maintenance is _____.
A. $0
B. $3,539
C. $4,998
D. $4,200

45) Gomez 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, the amount of overhead that would be allocated from Maintenance to Mixing is:
A. $36,000
B. $42,750
C. $42,000
D. $63,000

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

47) _____ is another term for variable costing.
A. Absorption costing
B. Direct costing
C. Traditional costing
D. Full costing

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


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

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

D. A management control system aids and coordinates the process of making decisions.

Solution Description

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

42) The use of budgeted service department cost rates protects using departments from _____.
A. all of these answers are correct
B. service outages
C. service department efficiencies
D. price fluctuations

43) 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