Question : 41. Which of the following statements true? A. Any cost connected to a : 1208194

41. Which of the following statements is true? 
A. Any cost connected to a cost object is a direct cost.
B. Costs that do not have a strong cause-and-effect relationship with a cost driver are called direct costs.
C. A cost driver is used to allocate a direct cost when there is a cause-and-effect relationship between the cost and the cost object.
D. Fixed costs that do not have a definitive cost driver are allocated using an allocation base that distributes a rational share of the cost to each product.

42. Selection of a cost driver depends on: 
A. The availability of information for both the cost and the potential cost driver.
B. A cause-and-effect relationship between the cost driver and the cost.
C. Judgment of management.
D. All of the other answers are correct.

43. For a manufacturer, measures of volume may include: 
A. Number of units produced.
B. Number of direct hours worked.
C. Amount of direct materials used in production.
D. All of the other answers are correct.

44. The Rockmart Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $117,000 at the beginning of the year was expected to deliver 200,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site:
  
How much truck depreciation should be allocated to Site D? (Round your answer to the nearest dollar.) 
A. $15,955
B. $878
C. $1,170
D. None of the other answers are correct.

45. City University’s College of Business is divided into three departments, accounting, marketing, and management. Relevant information for each department is provided below:
   
A. The chair of management will want to use the number of classes per semester while the chair of marketing will prefer the number of students.
B. The chair of accounting and the chair of management will want to use the number of faculty.
C. The chair of the marketing department will want to use number of faculty, while the chair of the accounting department will want to use number of students.
D. The chair of the accounting department will want to use number of students while the chair of the management department will want to use number of faculty.

The Dean of the College of Business is trying to assign funds from the operating budget to the three departments. Assuming that the chair of each department is trying to attain the highest funding possible for his/her department, which of the following most accurately describes the allocation base that each chair will favor?

46. During 2012, the Granger Construction Company built 23 custom homes that ranged in size from 2,500 square feet to 8,000 square feet. One home was completed each month during January, February, and March. Three homes were completed during April and May. Two homes were completed during each of the months from June through December. Based upon this information, the most appropriate allocation base (i.e., cost driver) for the assignment of indirect overhead costs to each house would be the: 
A. Size of the home.
B. Number of months in the year.
C. Number of homes built during the year.
D. Number of homes built during the month.

47. Paul’s Department Store has three departments: Men’s, Women’s and Children’s. The store incurred $30,000 of store rental costs in 2012. The departments identified the following cost drivers for 2012:
  
Using the most appropriate cost driver, how much rental cost (rounded to the nearest dollar) should be allocated to the Children’s Department? 
A. $4,660
B. $3,529
C. $2,500
D. $2,093

48. Ziegler Construction Company builds warehouses that range in size from 12,000 to 100,000 square feet. Which of the following would not be a rational base for allocating overhead costs to the warehouses? 
A. Labor hours
B. Number of warehouses completed
C. Direct materials cost
D. Square footage of the warehouses

49. Hamby Company expects to incur overhead costs of $10,000 per month and direct production costs of $125 per unit. The estimated production activity for the upcoming year is 1,000 units. If the company desires to earn a gross profit of $50 per unit, the sales price per unit would be which of the following amounts? 
A. $183
B. $175
C. $130
D. $275

50. Halt Company employs material handling employees who move materials between production divisions at a labor cost of $180,000 a year. It is estimated that these employees move 600,000 pounds of material per year. If 60,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? 
A. $12,000
B. $18,000
C. $25,000
D. $19,000