Question :
Objective 15.3
1) Special cost-allocation problems arise when ________.
A) support department : 1211860
Objective 15.3
1) Special cost-allocation problems arise when ________.
A) support department costs exceed budgetary estimates
B) practical capacity is used as the allocation base
C) support departments provide reciprocal services to each other and operating departments
D) the same cost-allocation base is used among various support departments
2) Which of the following departments is a support department for a boat manufacturing company?
A) production
B) molding
C) assembling
D) accounting
3) The direct allocation method ________.
A) allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments
B) allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments
C) allocates each support-department’s costs to operating departments only
D) requires managers to rank the support departments in the order that the step-down allocation is to proceed
4) The method that allocates costs by explicitly including all the services rendered among all support departments is the ________.
A) direct method
B) step-down method
C) reciprocal method
D) sequential method
5) Under which allocation method are one-way reciprocal support services recognized?
A) direct method
B) artificial cost method
C) reciprocal method
D) step-down method
6) The step-down method ________.
A) partially recognizes the services provided among support departments
B) does not recognize the total services that support departments provide to each other
C) is conceptually the most precise method
D) results in allocating only the support costs used by operating departments
7) The direct allocation method ________.
A) does not allocate support department costs to other support departments
B) uses information about reciprocal services provided among support departments and can therefore lead to inaccurate estimates of the cost of operating departments
C) allocates complete reciprocated costs
D) offers key input for outsourcing decisions
8) The reciprocal allocation method ________.
A) is the most widely used because of its simplicity
B) requires the ranking of support departments in the order that the allocation is to proceed
C) highlights the complete reciprocated costs of support departments and how these costs differ from budgeted or actual costs of the departments
D) allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments
9) Complete reciprocated costs ________.
A) are less than the support department’s own costs
B) include the support department’s costs plus any interdepartmental cost allocations
C) are used for step-down allocations
D) are also referred to as budgeted costs
10) Managers of supplier departments ________.
A) view the budgeted rates positively if unfavorable cost variances occur due to price decreases outside of their control
B) view the budgeted rates negatively if favorable cost variances occur due to price decreases outside of their control
C) view the budgeted rates negatively if unfavorable cost variances occur due to price increases outside of their control
D) view the budgeted rates negatively if unfavorable cost variances occur due to price decreases outside of their control
