Question : Objective 15.1 1) The method that allocates costs in each cost : 1211842

Objective 15.1

1) The method that allocates costs in each cost pool using the same rate per unit is known as the ________.

A) incremental cost-allocation method

B) reciprocal cost-allocation method

C) single-rate cost allocation method

D) dual-rate cost-allocation method

2) The dual-rate cost-allocation method classifies costs in each cost pool into a ________.

A) budgeted-cost pool and an actual-cost pool

B) variable-cost pool and a fixed-cost pool

C) direct-cost pool and an indirect-cost pool

D) direct-cost pool and a reciprocal-cost pool

3) The single-rate cost-allocation method may base the denominator choice on ________.

A) master-budget capacity utilization

B) fixed cost utilization

C) variable cost utilization

D) direct-cost utilization

4) When using the dual-rate method, the fixed cost allocation is based on ________.

A) indirect usage

B) budgeted usage

C) incremental cost allocation

D) prime cost allocation

5) Which of the following is an advantage of the single-rate method?

A) It is less costly to implement.

B) It classifies costs as fixed and variable costs.

C) It gives signals regarding how variable and fixed costs behave differently.

D) It helps the managers on short-run and long-run planning due to fixed cost allocation as per budgeted usage.

6) Which of the following is a disadvantage of single-rate method?

A) It is very costly to implement.

B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest.

C) It does not signal to department managers how variable costs and fixed costs behave differently.

D) It requires managers to distinguish variable costs from fixed costs, which is often a challenging task.

7) Which of the following is an advantage of a dual-rate method?

A) It is the most widely used method in practice.

B) It is less costly to implement.

C) It avoids the expensive analysis for categorizing costs as either fixed or variable.

D) It allocates fixed cost as per the budgeted usage that helps in short and long-run planning.

8) Which of the following is a disadvantage of a dual-rate method?

A) It allocates fixed costs on the basis of budgeted long-run usage may tempt some managers to underestimate their planned usage.

B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest.

C) It allocates fixed and variable-cost pool using the same cost-allocation base, which will mislead managers in making decisions.

D) It does not guide department managers to make decisions that benefit both the organization as a whole and each department.

9) The advantage of using practical capacity to allocate costs ________.

A) is that it allows a downward supply spiral to develop

B) is that it focuses management’s attention on managing unused capacity

C) is that budgets are much easier to develop

D) is that it results in departments bearing a lower percentage of fixed costs

10) The biggest advantage of using practical capacity to allocate costs is that it ________.

A) focuses the user’s division with the costs of overused capacity

B) never causes over or under-allocated overhead

C) burdens the user divisions with the costs of unused capacity

D) focuses management’s attention on unused capacity