Question :
31. Milton Company has three departments occupying the following amount of : 1208193
31. Milton Company has three departments occupying the following amount of floor space:
How much store rent should be allocated to Department 2 if total rent is equal to $100,000?
A. $25,000
B. $50,000
C. $20,000
D. None of the other answers are correct.
32. Select the incorrect statement from the following.
A. The cost object determines whether a cost is classified as direct or indirect.
B. The same cost cannot be classified as both direct and indirect.
C. Relevant costs can include direct and indirect costs.
D. Direct costs can display a fixed or variable behavior pattern.
33. The East and West Railroad has two divisions, the East Division and the West Division. The company recently invested $800,000 to maintain its railroad track. Pertinent data for the two divisions are as follows:
Total Miles Traveled
The amount of track improvement cost that should be allocated to the East Division is:
A. $500,000.
B. $400,000.
C. $480,000.
D. $320,000.
34. At the beginning of the year, Roach Company expected to incur $54,000 of overhead costs in producing 6,000 units of product. The direct material cost is $20 per unit of product. Direct labor cost is $30 per unit. During January, 500 units were produced. The total cost of the units made in January was:
A. $29,500
B. $25,000
C. $4,500
D. None of the other answers are correct.
35. At the beginning of 2012, Barr Co. estimated that its total annual fixed overhead costs would amount to $50,000. Further, Barr estimated that its volume of production would be 2,000 units of product. Based on these estimates, Barr computed a predetermined overhead rate that was used to allocate overhead costs to the products made in 2012. As predicted, actual fixed overhead costs did amount to $50,000. However, actual volume of production amounted to only 1,800 units of product. Based on this information alone:
A. Products were costed accurately in 2012.
B. Products were overcosted in 2012.
C. Products were undercosted in 2012.
D. The answer cannot be determined from the information provided.
36. Leather Company makes two types of women’s handbags. Making a standard handbag requires 2 hours of labor while making a deluxe handbag requires 5 hours of labor. During the most recent accounting period the company made 2,000 standard handbags and 500 deluxe handbags. Indirect manufacturing costs amounted to $52,000. Based on this information:
A. $8 of overhead cost should be allocated to each handbag regardless of the type of handbag made.
B. $20.80 of overhead cost should be allocated to each handbag regardless of the type of handbag made.
C. $16 of overhead cost should be assigned to each standard handbag and $40 of overhead cost should be assigned to each deluxe bag.
D. None of the other answers are correct.
37. Shed Industries produces two products. The products’ identified costs are as follows:
The company’s overhead costs of $54,000 are allocated based on labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What amount of production costs would be assigned to Product B?
A. $39,000
B. $75,000
C. $93,000
D. None of the other answers are correct.
38. Shed Industries produces two products. The products’ identified costs are as follows:
The company’s overhead costs of $54,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product A?
A. $12.50
B. $17.00
C. $14.75
D. None of the other answers are correct.
39. The process of dividing a total cost into parts and assigning it to cost objects is known as:
A. Cost allocation.
B. Cost division.
C. Divide and conquer.
D. None of the other answers are correct.
40. Which of the following is a step in allocating indirect costs to cost objects?
A. Multiply the allocation rate by the weight of the cost driver.
B. Trace indirect costs to individual cost pools.
C. Compute an allocation rate by dividing the total cost to be allocated by the total cost driver volume.
D. All of the other answers are correct.
