FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Cost Accumulation, Tracing, and Allocation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

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.

E) All of the above
F) C) and D)

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

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

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

True/False

Review LaterAdd Note

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

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

Alleghany Community College operates four departments. The square footage used by each department is shown below. $\begin{array}{lc}\text { Department }&\text {Square Footage }\\\text { Accounting } & 5,000 \\\text { Marketing } &6,000 \\\text { Technology } &8,000 \\\text { Sciences } & \underline{5,000}\\\text { Total }& \underline{24,000}\end{array}$ Alleghany's annual building rental cost is $270,000.What amount of rent expense should be allocated to the Sciences Department? (Do not round intermediate calculations.)

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

Sometimes, volume-based cost drivers are used to allocate fixed indirect costs.

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?

At the beginning of the year, Rangle Company expected to incur $63,000 of overhead costs in producing 6,300 units of product. The direct material cost is $29 per unit of product. Direct labor cost is $39 per unit. During January, 590 units were produced. The total cost of the units made in January was:

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: $\text { Total Miles Traveled: }$ $\begin{array}{ll} \text { Western Division } &800,000 \text { miles } \\ \text {Pacific Division } & 1,200,000 \text { miles } \\\end{array}$ The amount of track improvement cost that should be allocated to the Western Division is:

Sheddon Industries produces two products. The products' identified costs are as follows: $\begin{array} { l c c } & \text { Product A } & \text { Product B } \\\text { Direct materials } & \$ 20,000 & \$ 15,000 \\\text { Direct labor } & 12,000 & 24,000\end{array}$ 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 intermediate calculations.)

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

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:

For a manufacturer, measures of volume may include:

The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $126,000 at the beginning of the year was expected to deliver 126,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: $\begin{array} { | l | c | c | c | c | } \hline \text { Construction Sites: } & \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Tons Delivered: } & 1,000 & 2,500 & 3,000 & 500 \\\hline\end{array}$ How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

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 intermediate calculations.)

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $189,000 a year. It is estimated that these employees move 690,000 pounds of material per year. If 69,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)

Cost accumulation is used to:

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

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