Question : 61.Pets ‘n Pals attempting to determine the cost of operating : 1257132

 

 

61.Pets ‘n Pals is attempting to determine the cost of operating a particular store. Which of the following costs would be classified as an indirect cost?   

A. Fees paid to external accountant for corporate audit

 

B. Cost of operating company owned vehicles by the store

 

C. Salary of store manager

 

D. Cost of aquariums used to display exotic fish

 

 

62.Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department in a service company?   

A. Number of employees

 

B. Number of customers

 

C. Square footage of office space

 

D. Both number of employees and square footage of office space are correct.

 

 

63.Indirect costs are often pooled, and not allocated individually because:   

A. individualallocation would be more timely.

 

B. individual allocation would be more accurate.

 

C. individual allocation would be tedious.

 

D. the benefits of individual allocation of indirect costs are greater than the costs.

 

 

64.Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following should not be treated as direct costs, assuming the cost object is individual clocks?   

A. The clock face

 

B. The timing mechanism for each clock

 

C. Wood

 

D. Depreciation on clock-making equipment

 

 

65.Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?   

A. Salary of the clock production supervisor

 

B. Depreciation on the factory building

 

C. Depreciation on clock-making equipment

 

D. All of these answers are correct.

 

 

66.Which of the following regarding direct costs is a correct statement?   

A. Direct costs are always fixed costs.

 

B. Direct costs are always variable costs.

 

C. Direct costs are easily traced to cost objects.

 

D. Direct costs are never selling and administrative expenses.

 

 

67.Which of the followings statements is correct regarding direct and indirect costs?   

A. Direct costs cannot easily be traced to a cost object, whereas indirect costs can be easily traced to a cost object.

 

B. Direct costs can be easily traced to a cost object, whereas indirect costs cannot be easily traced to a cost object.

 

C. Direct costs are always relevant to a particular cost decision, whereas indirect costs are never relevant to a cost decision.

 

D. Direct costs are never relevant to a particular cost decision, whereas indirect costs are always relevant to a cost decision.

 

 

68.All of the following are examples of indirect costs that can be classified as being variable costs except:   

A. Utilities.

 

B. Material handling costs.

 

C. Production supervisor salaries.

 

D. Transportation costs.

 

 

69.Which formula best represents the first step used to allocate an indirect cost to a cost object?   

A. Total cost to be allocated/cost driver

 

B. Cost driver/allocation rate

 

C. Cost driver/total cost to be allocated

 

D. Allocation rate/total cost to be allocated

 

 

70.Assume that a factory seeks to allocate rent to several departments that occupy the factory. The factory is occupied by all the departments. Which of the following is the most logical cost driver for allocating the factory rent?   

A. Number of employees

 

B. Square footage occupied by each department

 

C. Machine hours

 

D. Number of labor hours in each department