Question : 15) An organization determines its allocation base depending upon which : 1186041

 

15) An organization determines its allocation base depending upon which of the following factors?

A) the purpose served by the cost allocation base

B) the size of the base

C) the number of different items in the base

D) the performance of the denominator activity

E) benchmarking competitor processes

 

16) 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

A) a beneficial cost pool.

B) a heterogeneous cost pool.

C) a homogeneous cost pool.

D) a similar cost pool.

E) an assigned cost pool.

 

17) Which of the following is false concerning homogeneous cost pools?

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

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

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 the same or similar cause-and-effect relationship between the cost allocator and the costs of the activity.

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

 

18) The method that allocates costs in each cost pool using the same rate per unit is known as the

A) incremental cost allocation method.

B) reciprocal cost allocation method.

C) single-rate cost allocation method.

D) dual-rate cost allocation method.

E) homogeneous cost allocation method.

 

19) Benefits of the single-rate method include

A) the low cost of implementation.

B) fixed costs that are transformed into variable costs for user decision making.

C) signals regarding how variable and fixed costs behave differently.

D) information that leads to outsourcing decisions that benefit the organization as a whole.

E) there is a stronger cause and effect relationship.

 

20) Benefits of the dual-rate method include

A) variable costs that are transformed into fixed costs for user decision making.

B) the low cost of implementation.

C) avoidance of expensive analysis for categorizing costs as either fixed or variable.

D) information that leads to outsourcing decisions that benefit the organization as a whole.

E) increased costs of implementation.

 

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

A) fixed method

B) dual-rate method

C) homogeneous method

D) standard cost method

E) single-rate method

 

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

A) dual-rate method

B) heterogeneous method

C) single-rate method

D) variable method

E) fixed rate method

23) 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

$450,000

Available capacity

1,250 hours

Budgeted long-term usage:

 

Cassette Department

1,000 hours

CD Department

175 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?

A) $960.00

B) $600.00

C) $982.98

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 capacity

2,500 hours

Budgeted long-term usage:

 

Cassette Department

2,000 hours

CD Department

350 hours

Budgeted variable cost per hour in the 2,000-hour to 2,500-hour relevant range

$600 per hour

 

24) 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?

A) $960.00

B) $600.00

C) $982.98

D) $1,021.28

E) $1,582.98