Question : 71. Everything Pets attempting to determine the cost of operating a : 1208171

 

71. Everything Pets is attempting to determine the cost of operating a particular store. Which of the following costs would be classified as an indirect cost? 
A. Salary of store manager
B. Cost of operating company owned vehicles
C. Fees paid to accountant for preparation of tax returns
D. Cost of aquariums used to display exotic fish

72. Which of the following is an appropriate cost driver for allocating indirect costs to a human resources department? 
A. Number of employees
B. Number of secretaries
C. Square footage of office space
D. All of the other answers are correct.

73. All of the following are reasons that indirect costs are often pooled, and not allocated individually, except: 
A. Individual allocation would be tedious.
B. Individual allocation would be more accurate.
C. Individual allocation would be more useful.
D. The benefits of individual allocation of indirect costs are greater than the costs.

74. Wahl Company manufactures fine furniture and grandfather clocks. Wahl has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following should not be treated as direct costs, assuming the cost object is individual clocks? 
A. The clock face
B. The timing mechanism for each clock
C. Wood
D. Property taxes on the factory

75. Wahl Company manufactures fine furniture and grandfather clocks. Wahl has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department? 
A. Insurance on the factory
B. Depreciation on the factory building
C. Utilities cost for heating and lighting the factory
D. All of the other answers are correct.

76. Which of the following regarding direct costs is a correct statement? 
A. Direct costs are always fixed costs.
B. Direct costs are always variable costs.
C. Direct costs are not easily traced to cost objects.
D. Direct costs can either be fixed or variable.

77. Which of the followings statements is correct regarding direct and indirect costs? 
A. Direct costs can easily be traced to a cost object, whereas indirect costs cannot be easily traced to a cost object.
B. Direct costs cannot be easily traced to a cost object, whereas indirect costs can be easily traced to a cost object.
C. Direct costs are always relevant to a particular cost decision, whereas indirect costs are never relevant to a cost decision.
D. Direct costs are never relevant to a particular cost decision, whereas indirect costs are always relevant to a cost decision.

78. All of the following are examples of indirect costs that can be classified as being variable costs except: 
A. Utilities.
B. Inspection costs.
C. Office supplies.
D. Straight-line depreciation expense on production equipment.

79. Which formula best represents the method used to allocate an indirect cost to a cost object? 
A. Cost driver/total cost to be allocated
B. Cost driver/allocation rate
C. Total cost to be allocated/cost driver
D. Allocation rate/total cost to be allocated

80. Assume that a factory seeks to allocate rent to several departments that occupy the factory. The factory is occupied by all the departments. Which of the following is the most logical cost driver for allocating the factory rent? 
A. Square footage occupied by each department
B. Number of employees
C. Machine hours
D. Number of secretaries in each department

 

 

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