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| 1 | |
Which of the following best identifies the decision-making relationship between cost drivers, cost objects and accumulated cost? |
| | A) | Cost objects are used to allocate estimated accumulated costs to cost drivers. |
| | B) | Cost objects are used to allocate actual accumulated costs to cost drivers. |
| | C) | Cost drivers are used to allocate estimated accumulated costs to cost objects. |
| | D) | Cost drivers are used to allocate actual accumulated costs to cost objects. |
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| 2 | |
When manufacturing air conditioners which of the following would be considered to be an indirect cost? |
| | A) | Cost of the condenser put in an air conditioner unit. |
| | B) | Cost of inspecting air conditioners. |
| | C) | Cost of assembling an air conditioner. |
| | D) | Cost of the box and packaging for an air conditioner. |
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| 3 | |
In a retail store which of the following would be considered to be an indirect cost to a department? |
| | A) | Cost of merchandise |
| | B) | Cost of Department Manager's Salary |
| | C) | Cost of Store Manager's Salary |
| | D) | Cost of Sales commissions. |
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| 4 | |
In a retail store chain which of the following would be considered to be an indirect cost to a store. |
| | A) | Cost of merchandise |
| | B) | Cost of Department Manager's Salary |
| | C) | Cost of Store Manager's Salary |
| | D) | Cost of Chain's President's Salary. |
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| 5 | |
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The Personnel Department Costs amounts to $162,800. The personnel department is responsible for recruiting, hiring and managing benefits. Which of the following cost drivers would be most appropriate for allocating the Personnel Department costs? |
| | A) | Number of Employees |
| | B) | Number of Hours |
| | C) | Number of Departments |
| | D) | Sales $ |
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| 6 | |
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What would be the amount of Personnel Department cost allocated Department C? |
| | A) | $ 4,400 |
| | B) | $ 13,200 |
| | C) | $ 44,000 |
| | D) | $162,800 |
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| 7 | |
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The President's Salary is $160,000 which cost driver is most appropriate? |
| | A) | Number of Employees |
| | B) | Number of Hours |
| | C) | Number of Departments |
| | D) | Sales $ |
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| 8 | |
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If you were the manager of Department A. Which cost driver would you argue to use to allocate the $200,100 cost of supplies used? |
| | A) | Number of Employees |
| | B) | Number of Units sold |
| | C) | Sales $ |
| | D) | Number of Departments |
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| 9 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_05instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (27.0K)</a>]]>
If the products sold have similar gross margin percentage which cost driver would be most appropriate to allocate cost of merchandise sold? |
| | A) | Sales $ |
| | B) | Number of Units sold |
| | C) | Square feet |
| | D) | Number of Employees |
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| 10 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_05instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (27.0K)</a>]]>
If cost of merchandise is 50% of sales $, then based upon the prior questions what is the contribution from Department A? |
| | A) | $675,000 |
| | B) | $615,300 |
| | C) | $604,300 |
| | D) | $600,000 |
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| 11 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_05instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (27.0K)</a>]]>
Based upon the same set of cost drivers what should happen with Department D? |
| | A) | Department D should use less supplies. |
| | B) | Department D should hire more full time employees. |
| | C) | Department D has a negative contribution and should be closed. |
| | D) | Department D has a negative contribution and the cost drivers need to be examined prior to closing the Department. |
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| 12 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_05instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (27.0K)</a>]]>
If Department D is closed what is the potential impact on the other departments? |
| | A) | There is no impact on the other departments. |
| | B) | The total costs will decrease and overall profitability will increase. |
| | C) | The president's salary is fixed facility level cost and losing Department D's contribution toward this cost will decrease overall profitability. |
| | D) | Cost of merchandise was the largest cost allocated to Department D, by closing the Department this cost no longer exists and the overall profitability will increase. |
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| 13 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_05instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (27.0K)</a>]]>
The company has some costs that have not been allocated. These include electricity for heat, cleaning, and telephones. Of the following allocation methods which is the better method of allocating these unallocated costs? |
| | A) | Establishing one cost pool and allocating the cost based upon square feet. |
| | B) | Establishing one cost pool and allocating the cost based upon number of employees. |
| | C) | Establishing two cost pools, one pool for telephones and allocate the cost based upon number of employees, and the other pool for heat and cleaning and allocate the cost based upon square feet. |
| | D) | Establishing two cost pools, one pool for telephones and allocate the cost based upon number of employees, and the other pool for heat and cleaning and allocate based upon sales $. |
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| 14 | |
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If overhead is allocated based upon direct labor hours what is the total cost per unit? |
| | A) | $ 103.80 |
| | B) | $ 118.40 |
| | C) | $ 133.90 |
| | D) | $ 148.40 |
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| 15 | |
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They decide that purchasing cost should be allocated based upon material cost and that the other overhead items will be allocated based upon direct labor. If they only sell 4,500 units what is the value of Ending Inventory. |
| | A) | $742,200 |
| | B) | $667,800 |
| | C) | $ 74,200 |
| | D) | Cannot compute this amount based upon the information provided. |
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| 16 | |
HCL Chemicals produces three products, HC, HL & CL. The raw materials cost $30,000 and processing costs $24,000. At this point 1,500 gallons of HC is produced and can sell for $20,000. Additional processing cost of $9,000 produces 4,000 gallons of HL and 500 gallons of CL. The HL can be sold for $60,000, and the CL can be sold for $5,000 after further processing that costs $1,000. What is the margin for Product HL? |
| | A) | $60,000 |
| | B) | $16,000 |
| | C) | ($3,000) |
| | D) | ($4,000) |
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| 17 | |
HCL Chemicals produces three products, HC, HL & CL. The raw materials cost $30,000 and processing costs $24,000. At this point 1,500 gallons of HC is produced and can sell for $20,000. Additional processing cost of $9,000 produces 4,000 gallons of HL and 500 gallons of CL. The HL can be sold for $60,000, and the CL can be sold for $5,000 after further processing that costs $1,000. Product CL costs $11/gallon prior to further processing costs of $1,000 or $2/gallon. Then the product can only be sold for $10.00/gallon. What should HCL do with Product CL? |
| | A) | Drop the product line because they are losing $1,500. |
| | B) | Drop the product line because they don't need 3 products. |
| | C) | Continue the product but charge more than $10/gallon. |
| | D) | Continue the product line because overall profitability will decrease without Product CL. |
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| 18 | |
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Using the Direct method to allocate the Personnel Department and Cleaning Department costs, what is the appropriate overhead allocation rate for Department A? |
| | A) | $ 62.27 |
| | B) | $ 61.31 |
| | C) | $123.97 |
| | D) | $116.44 |
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| 19 | |
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Using the Step Method to allocate Personnel Department and Cleaning Department costs, what is the appropriate overhead allocation rate to Department B? |
| | A) | $116.59 |
| | B) | $116.44 |
| | C) | $119.34 |
| | D) | $209.18 |
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| 20 | |
The method of allocating costs that takes into consideration the most two-way interrelationships is: |
| | A) | Direct Method |
| | B) | Step Method |
| | C) | Reciprocal Method |
| | D) | Interrelationship Allocation Method |
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| 21 | |
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Utilities represent costs to light and heat the space used. Under these circumstances, which is the best cost driver to allocate this indirect cost? |
| | A) | Number of Employees |
| | B) | Number of Hours |
| | C) | Square Feet |
| | D) | Number of Units Sold |
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| 22 | |
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073526797/378173/ch04_21instruct.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (26.0K)</a>]]>
Administration costs relate to marketing and selling the product. Under these circumstances, which is the best cost driver to allocate this indirect cost? |
| | A) | Number of Employees |
| | B) | Number of Hours |
| | C) | Square Feet |
| | D) | Number of Units Sold |
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| 23 | |
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The Department A supervisor wants to allocate the Human Resources costs using Full-Time employees and The Department D Supervisor wants to allocate the Human Resources costs using the Total Number of Employees. Which of the following is the best rational for the Department manager's position? |
| | A) | Both managers want the Corporation to be as profitable as possible. |
| | B) | Neither Manager cares about their own Department's Total Cost. |
| | C) | The Department D manager is willing to accept as high an allocated cost as is possible. |
| | D) | The Department A manager wants the smallest allocated cost as possible. |
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| 24 | |
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What are the total costs allocated to Department "B" assuming human resources is allocated based upon Total Employees, Administration costs are allocated based upon Units Sold, Utilities are allocated based upon square footage and supplies is allocated based upon number of hours? |
| | A) | $428,260 |
| | B) | $456,595 |
| | C) | $452,912 |
| | D) | $422,910 |
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