Question :
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement : 1196095
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement or answers the question. 21)
To encourage the design of products that are simpler to manufacture or less costly to service, would be an example of which cost allocation purpose? 21)
______ A)
to justify costs or compute reimbursements B)
to provide information for economic decisions C)
to measure income and assets for reporting to external parties D)
to determine employee’s wages E)
to motivate managers and employees
22)
All of the following illustrate purposes for allocating costs to cost objects EXCEPT 22)
______ A)
to determine employee’s wages. B)
to motivate employees. C)
to motivate managers. D)
to measure income and assets for reporting to external parties. E)
to provide information for economic decisions.
23)
Deciding whether to make a component part or to purchase it, would be an example of
which cost allocation purpose? 23)
______ A)
to determine employee’s wages B)
to motivate employees C)
to motivate managers D)
to measure income and assets for reporting to external parties E)
to provide information for economic decisions
24)
Which of the following is FALSE concerning which costs in the value chain will be allocated, and the purposes of cost allocation? 24)
______ A)
for the income measurement and external reporting purpose, inventoriable costs under GAAP include only manufacturing and design costs B)
for the cost reimbursement purpose, the particular contract will often stipulate whether all six of the business functions or only a subset of them are to be reimbursed C)
for the economic decision purpose, the costs in all six business functions should be included D)
for product pricing, the costs in all six business functions should be included E)
for the motivation purpose, costs for only one function is often included
25)
Which of the following criteria subsidizes poor performers at the expense of the best performers? 25)
______ A)
benefits expended B)
benefits-received C)
ability to bear D)
cause-and-effect E)
equity
26)
The belief that a corporate division with higher sales ought to be allocated more of the company’s advertising costs because it must have derived more benefit from the expenditures than a division with lower sales did, is an example of which criteria for cost allocation decisions? 26)
______ A)
cause-and-effect B)
ability to bear C)
benefits-expended D)
benefits-received E)
fairness and equity
27)
Which of the following is NOT a
common criteria used to guide decisions related to cost allocations? 27)
______ A)
cause-and-effect B)
ability to bear C)
fairness and equity D)
benefits-received E)
stable market prices
28)
All of the following, EXCEPT ________ are indicated in survey evidence as reasons that Canadian companies allocate corporate and support costs to divisions and departments. 28)
______ A)
to promote effective resource utilization B)
accountability C)
to evaluate revenue centres D)
to foster cost awareness E)
to evaluate profit centres.
29)
Which of the following is TRUE concerning cost allocation in a multi-product company? 29)
______ A)
Where the indirect costs are variable and each product is assembled sequentially. the cause-and-effect criterion can guide the choice of a cost allocation base. B)
Where the indirect costs are fixed and each product is assembled sequentially. the cause-and-effect criterion can guide the choice of a cost allocation base. C)
Where the indirect costs are variable and each product is not assembled sequentially. the cause-and-effect criterion can guide the choice of a cost allocation base. D)
Where the indirect costs are variable and the products are produced jointly, it is not possible to identify specific cause-and-effect relationships between work on an individual product and total costs incurred. E)
Where the indirect costs are fixed and each product is not assembled sequentially. the cause-and-effect criterion can guide the choice of a cost allocation base.
30)
A grouping of individual cost items is known as 30)
______ A)
an allocation base. B)
a cost pool. C)
grouped direct costs. D)
grouped indirect costs. E)
a homogenous cost group.
