Question : 59.An allocation of a predetermined amount that not affected by : 1302764

59.An allocation of a predetermined amount that is not affected by changes in the activity level of the organizational unit receiving the allocation is called a(n)

A.allocation base.

B.unitized cost.

C.lump-sum allocation.

D.cost driver.

60.Lump-sum allocations

A.generally changes year after year.

B.do not change when the activity levels of any of the user departments change.

C.are impacted by the usage of the allocated resource by other departments.

D.make fixed costs appear variable.

61.Which of the following statements is true concerning lump-sum allocations of service department costs?

AThey make fixed costs appear to be variable to the manager receiving the allocation.

B.They are not affected by the activity level in the department receiving the allocation.

C.They make fixed costs appear to be variable to the manager receiving the allocation and are not affected by the activity level in the department receiving the allocation.

D.They do not make fixed costs appear to be variable to the manager receiving the allocation and are affected by the activity level in the department receiving the allocation

62.Which of the following is not a problem caused by assigning actual service department costs to operating departments based on actual usage of service department activities by the operating departments?

A.The cost assigned to one manager will be affected by the service usage of another manager.

B.Inefficiencies in the service department will be passed along to the operating departments.

C.Operating managers having high peak capacity requirements will not have to bear the full cost of meeting this peak capacity.

D.All of these answer choices are problems caused by assigning actual service costs to operating departments.

63.The Copy Department of Hernandez Hardware is budgeted to incur $30,000 per month in fixed costs plus a cost of $0.02 per copy. The company allocates copy costs to user departments as follows:

                  Fixed costs are allocated as a lump sum based on budgeted fixed costs and estimated peak demand for each department.

                  Variable costs are allocated based on the budgeted rate per copy times the department’s actual usage.

Which of the following is an advantage of this allocation scheme over allocating all actual service costs based on actual usage?

A.Departments that use copy services are charged for cost overruns in the copy department.

B.The amount charged to a particular user department is affected by the number of copies used by another department.

C.Managers in departments that use services pay for the fixed costs that fluctuate based on their changing needs.

D.Managers are charged for the activities they use.

64.From the perspective of a manager of a producing department, which of the following is a desired feature of a cost allocation received from a service department?

A.The amount of the allocation should be based solely on the usage of the service by the producing department and not a function of the usage of the service by other departments.

B.The budgeted cost should be allocated rather than actual service department costs.

C.The allocation should force the production manager to pay for fluctuating demands that the production manager is creating.

D.All of these answer choices are correct.

65.Companies that use only one or two cost pools rather than several cost pools

A.incurs more cost of record keeping.

B.will experience more profit than if more pools are used.

C.may price products incorrectly due to inaccurate cost allocation.

D.are likely to be using ABC.

66.When activity-based costing is implemented, the initial outcome is that

A.the unit cost of all products will be higher.

B.the unit cost of all products will be lower.

C.the unit cost of low-volume products will be higher and the unit cost of high-volume products will be lower.

D.the unit cost of low-volume products will be lower and the unit cost of high-volume products will be higher.

67.Which of the following is likely to occur when fewer overhead cost pools are used?

A.Product costs will be less accurate.

B.Recordkeeping will be more expensive.

C.Decisions such as product pricing will be improved.

D.All products will be undercosted.

68.The traditional approach to cost allocation

A.tends to over-cost high volume core products.

B.usually requires more cost pools than ABC.

C.attempts to identify the activities that cause costs.

D.produces more accurate costs than other allocation methods.