Question : 41) What the allocated cost to the two departments, respectively, if : 1196097

 

41)

What is the allocated cost to the two departments, respectively, if budgeted usage is the base for fixed costs and actual usage is the base for variable costs? (Use dual-rate method.) Assume that the Cassette and CD Departments used 1,750 and 200 hours, respectively. 41)

______ A)

$1,787,240; $204,256 B)

$1,815,957; $254,043 C)

$1,050,000; $120,000 D)

$2,000,126; $294,112 E)

$1,787,240; $254,043

42)

When choosing between budgeted usage and actual usage as allocation bases, which of the following is TRUE? 42)

______ A)

Budgeted rates may lead to user departments outsourcing needed work, rather than rely on an internal support department. B)

Budgeted rates may help the manager of a support department to improve efficiency. C)

When budgeted rates are used, users must wait till the end of the budget period to know what their costs are. D)

During the budget period, a support department, rather than a user department, bears the risk of unfavourable cost variances. E)

Actual rates let users know in advance what their costs are.

43)

Fixed costs 43)

______ A)

should be allocated according to long-term expected usage. B)

should be allocated using actual usage as the allocation base. C)

should be allocated according to short-term expected usage. D)

should be allocated according to past production capacity. E)

should be allocated according to current usage.

Use the information below to answer the following question(s).

 

We Be Warehouse Fitness Equipment incurred $80,000 of common fixed costs and $120,000 of common variable costs. Data are provided below for the capacity allowed and the capacity used.

 

CapacityCapacity

DepartmentProvided in Hours Used in Hours

Barbell Department500400

Sauna Department300400

 

For both departments, common fixed costs are to be allocated on the basis of capacity provided and common variable costs are to be allocated on the basis of capacity used.

44)

The fixed and variable costs allocated to the Barbell Department are 44)

______ A)

$30,000 and $50,000 respectively. B)

$30,000 and $75,000, respectively. C)

$50,000 and $60,000, respectively. D)

$50,000 and $75,000, respectively. E)

$30,000 and $60,000, respectively.

45)

The fixed and variable costs allocated to the Sauna Department are 45)

______ A)

$50,000 and $75,000, respectively. B)

$30,000 and $75,000, respectively. C)

$50,000 and $60,000, respectively. D)

$30,000 and $60,000 respectively E)

$30,000 and $50,000, respectively.

46)

Both fixed and variable costs are allocated according to capacity used. The fixed and variable costs allocated to the Barbell Department are 46)

______ A)

$60,000 and $40,000, respectively. B)

$30,000 and $60,000, respectively. C)

$30,000 and $75,000 respectively. D)

$30,000 and $50,000, respectively. E)

$40,000 and $60,000, respectively.

47)

An advantage to using budgeted usage for the allocation base, rather than actual usage is that, 47)

______ A)

variable costs are lower. B)

GAAP requirements requires it for comparability to previous years. C)

user divisions will know their allocated costs in advance. D)

it is consistent with a short-run time horizon. E)

management does not have to be accountable for actual costs since the system only deals with budgeted costs.

48)

Fixed costs should NOT be allocated according to actual usage because 48)

______ A)

managers may be tempted underestimate usage. B)

variation in usage will result in variances, which will have to dealt with. C)

some organizations offer rewards to managers who make accurate forecasts. D)

the allocation would capture the cause-and-effect relationship. E)

changes in one department’s usage should not affect another department’s allocation.

49)

Which of the following could be described as a department that adds value to a product or service, which is observable, by a customer? 49)

______ A)

a personnel department. B)

an assigned department. C)

an operating department. D)

a service department. E)

a support department.

50)

Which of the following is FALSE concerning support departments? 50)

______ A)

An example of a support department would be a personnel department. B)

To obtain accurate product costs requires the inclusion of support department costs. C)

A support department is not an operating department. D)

Direct support costs are always traced, indirect support department costs are allocated. E)

Support departments create special accounting problems when they provide reciprocal support to each other.

51)

To discourage excessive use of a support department, management might