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| 1 | |
Jacana Manufacturing Company is using a product costing system that is assigning direct material and direct labour at actual amounts, assigning costs as they are incurred and applying manufacturing overhead using a predetermined manufacturing overhead rate. Jacana Manufacturing Company is using: |
| | A) | actual costing |
| | B) | activity-based costing |
| | C) | standard costing |
| | D) | normal costing |
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| 2 | |
Volume-based cost drivers may be: - a proxy for the volume of production
- the number of units produced if the business produces only one product
- direct labour hours or direct labour costs, machine hours or direct material quantities or costs if the business produces more than one product
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| | A) | 1 only |
| | B) | 2 only |
| | C) | 3 only |
| | D) | 1, 2 and 3 |
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| 3 | |
Broadmeadows Manufacturing Company is currently operating at a level of capacity that will satisfy average customer demand over the normal business cycle (which spans several years) taking account of seasonal, cyclical and trend factors. Broadmeadows Manufacturing Company is currently operating at which level of capacity? |
| | A) | Budgeted volume. |
| | B) | Normal volume. |
| | C) | Theoretical capacity volume. |
| | D) | Practical capacity volume. |
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| 4 | |
Due to the overwhelming customer demand for a new, innovative, fat-free chocolate biscuit that actually tastes like a full-fat chocolate biscuit, the Crispy Snack Food Company is operating at the maximum level of production that can be achieved in a specified period, assuming that the plant runs at peak efficiency all day, every day, without ever stopping. This is known as: |
| | A) | budgeted volume |
| | B) | normal volume |
| | C) | theoretical capacity |
| | D) | practical capacity |
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| 5 | |
The Crispy Snack Food Company has a corporate advertising campaign that is advertising the company name, the company’s charitable activities and the company’s commitment to supplying healthy snacks to Australia’s children and families. If a corporate advertising campaign was perceived as providing more benefits to the retail areas of the company than to the administrative areas so that the retail areas were allocated a greater share of the cost of the campaign, it would be an example of: |
| | A) | indirect cost allocation based on the ability to bear |
| | B) | indirect cost allocation based on cost drivers |
| | C) | indirect cost allocation based on benefits received |
| | D) | indirect cost allocation based on established cause-and-effect relationships |
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| 6 | |
The allocation of support department costs to user departments may encourage managers to: |
| | A) | plan and control their use of the support department’s services |
| | B) | over-consume support department resources |
| | C) | under-consume support department resources |
| | D) | eliminate the use of support department services and outsource the services |
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| 7 | |
The Crispy Snack Food Company is currently discussing the allocation of support department costs to the production (user) departments. After a detailed analysis of the maintenance department’s costs and discussions with the maintenance and production department personnel, Crispy Snack Food Company discovered that there was a causal link between the machine hours and the maintenance department’s total cost. Which of the following would be the most appropriate basis for allocating the costs of the maintenance departments to the production (user) departments? |
| | A) | Square metres occupied. |
| | B) | Direct labour hours. |
| | C) | Direct labour dollars. |
| | D) | Machine hours. |
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| 8 | |
Rose Manufacturing Company operates two support departments and two production departments. Budgeted costs and normal activity levels are as follows:
| Support Department | Production Department |
| W | X | Y | Z | Overhead costs | $10000 | $25000 | $45000 | $60000 | Square metres | 1000 | 2000 | 3000 | 5000 | Number of employees | 10 | 12 | 30 | 20 | Direct labour hours |
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| 7500 | 3200 | Machine hours |
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| 3000 | 2500 |
Support Department W’s overhead costs are allocated based on square metres and Support Department X’s overhead costs are allocated on the basis of number of employees. Production Department Y uses direct labour hours to assign overhead costs to products and Production Department Z uses machine hours. One of the products the company manufactures, Product A, requires two direct labour hours in Department Y and three machine hours in Department Z. Direct materials for the product cost $45 per unit and direct labour is $20 per unit. If the direct method of support department allocation was used, the amount of Support Department W’s costs allocated to Production Department Y is: |
| | A) | $3750 |
| | B) | $6250 |
| | C) | $3000 |
| | D) | $5000 |
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| 9 | |
Rose Manufacturing Company operates two support departments and two production departments. Budgeted costs and normal activity levels are as follows:
| Support Department | Production Department |
| W | X | Y | Z | Overhead costs | $10000 | $25000 | $45000 | $60000 | Square metres | 1000 | 2000 | 3000 | 5000 | Number of employees | 10 | 12 | 30 | 20 | Direct labour hours |
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| 7500 | 3200 | Machine hours |
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| 3000 | 2500 |
Support Department W’s overhead costs are allocated based on square metres and Support Department X’s overhead costs are allocated on the basis of number of employees. Production Department Y uses direct labour hours to assign overhead costs to products and Production Department Z uses machine hours. One of the products the company manufactures, Product A, requires two direct labour hours in Department Y and three machine hours in Department Z. Direct materials for the product cost $45 per unit and direct labour is $20 per unit. If the direct method of support department allocation was used, the amount of Support Department W’s costs allocated to Production Department Z is: |
| | A) | $3750 |
| | B) | $6250 |
| | C) | $3000 |
| | D) | $5000 |
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| 10 | |
Rose Manufacturing Company operates two support departments and two production departments. Budgeted costs and normal activity levels are as follows:
| Support Department | Production Department |
| W | X | Y | Z | Overhead costs | $10000 | $25000 | $45000 | $60000 | Square metres | 1000 | 2000 | 3000 | 5000 | Number of employees | 10 | 12 | 30 | 20 | Direct labour hours |
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| 7500 | 3200 | Machine hours |
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| 3000 | 2500 |
Support Department W’s overhead costs are allocated based on square metres and Support Department X’s overhead costs are allocated on the basis of number of employees. Production Department Y uses direct labour hours to assign overhead costs to products and Production Department Z uses machine hours. One of the products the company manufactures, Product A, requires two direct labour hours in Department Y and three machine hours in Department Z. Direct materials for the product cost $45 per unit and direct labour is $20 per unit. If the direct method of support department allocation was used, the amount of Support Department X’s costs allocated to Production Department Y is: |
| | A) | $10 800 |
| | B) | $15 000 |
| | C) | $15 800 |
| | D) | $16 200 |
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