Question : 31) An organization determines its allocation base depending upon all of : 1196096

 

31)

An organization determines its allocation base depending upon all of the following factors EXCEPT 31)

______ A)

the size of the base. B)

the purpose served by the cost allocation. C)

the cost required to implement different allocation bases. D)

the manager’s decision concerning the reason for the cost allocation. E)

the criteria used to guide the cost allocation.

32)

When all of a cost pool’s individual activities have the same or similar relationships between the cost driver and the costs of the activity, it is considered 32)

______ A)

a similar cost pool. B)

a heterogeneous cost pool. C)

a beneficial cost pool. D)

an assigned cost pool. E)

a homogeneous cost pool.

33)

Which of the following is FALSE concerning homogeneous cost pools? 33)

______ A)

The cost allocations using the pool will be the same as would be made if each individual activity in the pool were allocated separately. B)

They enable more accurate product, service and customer costs to be obtained. C)

The greater the degree of homogeneity, the fewer cost pools are required to accurately explain differences in how products use resources. D)

All activities in the pool have a unique and different benefits-received relationship between the cost allocator and the costs of the activity. E)

All activities in the pool have the same or similar cause-and-effect relationship between the cost allocator and the costs of the activity.

34)

Under which of the following methods of cost allocation is there no distinction between fixed and variable costs? 34)

______ A)

dual-rate method B)

homogeneous method C)

fixed method D)

single-rate method E)

standard cost method

35)

Which cost allocation method differentiates between variable and fixed costs? 35)

______ A)

heterogeneous method B)

fixed rate method C)

single-rate method D)

variable method E)

dual-rate method

36)

CD Company manufactures cassettes and CDs. Management is attempting to set the budget for the coming year. Two divisions (Cassette and CD) of the company utilize one plant location. The following data have been prepared for review.

 

Fixed operation costs$450,000

Available capacity1,250 hours

Budgeted long-term usage:

Cassette Department1,000 hours

CD Department175 hours

Budgeted variable cost per hour in the

1,000-hour to 1,250-hour relevant range$ 600 per hour

 

What is the cost per hour of use for the Cassette department and the CD Department assuming budgeted usage is the allocation base and a single-rate method is used? 36)

______ A)

$982.98 B)

$382.98 C)

$600.00 D)

$1,021.28 E)

$1,582.98

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

 

Data Source Media manufactures cassettes and CDs. Management is attempting to set the budget for the coming year. Two divisions (Cassette and CD) of the company utilize one plant location. The following data have been prepared for review.

 

Fixed operation costs$900,000

Available capacity2,500 hours

Budgeted long-term usage:

Cassette Department2,000 hours

CD Department

350 hours

Budgeted variable cost per hour in the

2,000-hour to 2,500-hour relevant range $600 per hour

37)

What is the cost per hour of use for the Cassette department and the CD Department assuming budgeted usage is the allocation base and a single-rate method is used? 37)

______ A)

$1,582.98 B)

$600.00 C)

$982.98 D)

$1,021.28 E)

$382.98

38)

What is the fixed cost per year and the variable cost per hour, respectively, for the Cassette Department using the dual-rate method, assuming that the allocation bases are capacity for fixed costs and actual usage for variable costs? 38)

______ A)

$765,958 rounded and $480 B)

$765,958 rounded and $600 C)

$900,000 and $600 D)

$720,000 and $600 E)

$720,000 and $480

39)

What are the fixed cost per year and the variable cost per hour for the CD Department if the dual-rate method is used? Assume that the allocation bases are budgeted usage for fixed costs and actual usage for variable costs. 39)

______ A)

$900,000 and $600 B)

$126,000 and $600 C)

$134,043 rounded and $600 D)

$100,270 and $600 E)

$134,043 rounded and $89.36

40)

What is the allocated cost to the two departments, respectively, if the single rate is $1,000? Assume that the Cassette and CD Departments used 1,750 and 200 hours, respectively. 40)

______ A)

$900,000 and $200,000 B)

$900,000 and $320,000 C)

$1,750,000 and $200,000 D)

$807,692 rounded and $92,308 rounded E)

$2,800,000 and $320,000