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Cost Final Chapter 15

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Quiz on Cost Final Chapter 15, created by amanda.padilla on 22/05/2016.
amanda.padilla
Quiz by amanda.padilla, updated more than 1 year ago
amanda.padilla
Created by amanda.padilla over 10 years ago
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Question 1

Question
To discourage unnecessary use of a support department, management might ________.
Answer
  • allocate user department costs based upon support department usage
  • allocate support department costs based upon user department usage
  • allocate a fixed amount of support department costs to each and every department
  • allocate a fixed amount of user department costs to each and every department

Question 2

Question
The biggest advantage of using practical capacity to allocate costs is that it ________.
Answer
  • focuses the user's division with the costs of overused capacity
  • never causes over or under-allocated overhead
  • burdens the user divisions with the costs of unused capacity
  • focuses management's attention on unused capacity

Question 3

Question
The method that allocates costs by explicitly including all the services rendered among all support departments is the ________.
Answer
  • direct method
  • step-down method
  • reciprocal method
  • sequential method

Question 4

Question
A cost of operating a facility, department, activity area, or like cost object that is shared by two or more users is called a ________.
Answer
  • combined cost
  • distinct cost
  • fixed cost
  • common cost

Question 5

Question
Contract disputes regarding cost allocation can be reduced by defining ________.
Answer
  • the material items allowed for production
  • the terms used, such as what constitutes direct
  • permissible tax deductions
  • minimum profit level the company should earn

Question 6

Question
Tours Corp offers towing services, auto routing, travel brochures, and other travel services for one annual fee. This is an example of ________.
Answer
  • revenue tracing
  • revenue allocation
  • a bundled product
  • a business conglomerate

Question 7

Question
The method that ranks individual products in a bundle for revenue allocation is the ________.
Answer
  • stand-alone revenue-allocation method
  • incremental revenue-allocation method
  • unit-cost weighting method
  • physical-unit weighting method

Question 8

Question
Which of the following is a disadvantage of a dual-rate method?
Answer
  • It allocates fixed costs on the basis of budgeted long-run usage may tempt some managers to underestimate their planned usage.
  • It may lead operating department managers to make sub-optimal decisions that are in their own best interest.
  • It allocates fixed and variable-cost pool using the same cost-allocation base, which will mislead managers in making decisions.
  • It does not guide department managers to make decisions that benefit both the organization as a whole and each department.
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