Question : Objective 15.1 1) The method that allocates costs in each cost : 1216983

 

 

 

Objective 15.1

 

1) 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

 

2) The dual-rate cost-allocation method classifies costs in each cost pool into a:

A) budgeted-cost pool and an actual-cost pool

B) variable-cost pool and a fixed-cost pool

C) used-capacity-cost pool and a practical-capacity-cost pool

D) direct-cost pool and a reciprocal-cost pool

 

3) The single-rate cost-allocation method may base the denominator choice on:

A) master-budget capacity utilization

B) normal capacity utilization

C) practical capacity

D) All of these answers are correct.

4) When using the single-rate method, fixed cost allocation may be based on:

A) actual usage

B) budgeted usage

C) incremental cost allocation

D) Either A or B are correct.

 

5) Benefits of the single-rate method include:

A) it is easier to calculate

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

 

6) 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

 

7) The advantage of using practical capacity to allocate costs:

A) is that it allows a downward demand spiral to develop

B) is that it focuses management’s attention on managing unused capacity

C) is that budgets are much easier to develop

D) Either A or B are correct.

Answer the following questions using the information below:

 

The Charmatz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year:

 

Budgeted costs of operating the copying facility

for 400,000 to 600,000 copies:

Fixed costs per year$60,000

Variable costs3 cents (.03) per copy

Budgeted long-run usage in copies per year:

Marketing Department120,000 copies

Operations Department380,000 copies

 

Budgeted amounts are used to calculate the allocation rates.

 

Actual usage for the year by the Marketing Department was 80,000 copies and by the Operations Department was 360,000 copies.

 

8) If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department?

A) $18,000

B) $3,600

C) $14,400

D) $16,800

9) If a single-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Marketing Department? Assume actual usage is used to allocate copying costs.

A) $16,800

B) $18,000

C) $12,000

D) $9,600

 

10) If a dual-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Operations Department?

A) $57,000

B) $56,400

C) $60,490

D) $59,890