FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Cost Accumulation, Tracing, and Allocation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Sheddon Industries produces two products. The products' identified costs are as follows: $\begin{array} { l c c } & \text { Product A } & \text { Product B } \\\text { Direct materials } & \$ 20,000 & \$ 15,000 \\\text { Direct labor } & \$ 12,000 & 24,000\end{array}$ The company's overhead costs of $108,000 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 B? (Do not round intermediate calculations.)

A) $7.80
B) $22.20
C) $16.80
D) None of the answers are correct.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Michael & Co. expects overhead costs of $16,000 per month and direct production costs of $30 per unit. The estimated production activity for the current accounting period is as follows: $\begin{array} { | c | c | c | c | c | } \hline & 1 ^ { st} \text {Quarter } & 2 ^ { \text {nd } } \text { Quarter }& { 3 } ^ { \text {rd } }\text { Quarter } \text { Quarter } & 4 ^ { \text {th } } \text { Quarter } \\\hline \text { Units produced } & 10,500 & 6,000 & 6,000 & 9,500 \\\hline\end{array}$ The predetermined overhead rate based on units produced is: (Round the answer to 2 decimal places.)

A) $0.50 per unit.
B) $2.00 per unit.
C) $6.00 per unit.
D) $36.00 per unit.

E) A) and D)
F) B) and C)

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Select the incorrect statement from the following.

Volume measures serve as good cost drivers for allocating variable overhead costs because of the causal relationship that exists between those drivers and variable costs.

Select the correct statement from the following.

Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge 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?

The most useful cost driver for allocating a particular cost is the one with the strongest cause-and-effect relationship.

Volume measures serve as good cost drivers for allocating variable overhead costs because of the causal relationship that exists between those drivers and variable costs.

A cost object is anything for which management desires a separate tracking of costs, while a cost driver is the factor that causes the cost object to increase or decrease.

The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $122,000 at the beginning of the year was expected to deliver 122,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: $\begin{array} { | l | c | c | c | c | } \hline \text { Construction Sites: } & \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Tons Delivered: } & 1,400 & 2,500 & 3,400 & \text { 900 } \\\hline\end{array}$ How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

An allocation base has a cause-and-effect relationship with a cost object.

A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true?

Michael & Co. expects overhead costs of $28,000 per month and direct production costs of $14 per unit. The estimated production activity for the current accounting period is as follows: $\begin{array} { | c | c | c | c | c | } \hline & 1 ^ { st } \text {Quarter } & \mathbf { 2 } ^ { \text {nd } } \text { Quarter } & \mathbf { 3 } ^ { \text {rd } } \text { Quarter } & 4 ^ { \text {th } } \text { Quarter } \\\hline \text { Units produced } & 11,700 & 9,200 & 6,350 & 12,750 \\\hline\end{array}$ The predetermined overhead rate based on units produced is: (Round the answer to 2 decimal places.)

Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:

Which of the following is not an example of a cost object and its related cost driver? $\begin{array}{cc} \text { Cost Object } &&&& \text { Cost Driver} \\\end{array}$ A. $\begin{array}{cc} \text { Rent } &&&&&& \text { Square feet } \\\end{array}$ B. $\begin{array}{cc} \text { Transportation } & & \text { Miles driven } \\\end{array}$ C. $\begin{array}{cc} \text { Direct labor hours } & \text { Indirect labor} \\\end{array}$ D. $\begin{array}{cc} \text { Uttilities} &&&&& \text { Machine hours } \\\end{array}$

Indirect costs should not be pooled unless they share a common cost driver.

At the beginning of the year, Barcroft Co. estimated that its total annual fixed overhead costs would amount to $25,000. Further, Barcroft estimated that its volume of production would be 2,000 units of product. Based on these estimates, Barcroft computed a predetermined overhead rate that was used to allocate overhead costs to the products made during the year. As predicted, actual fixed overhead costs did amount to $25,000. However, actual volume of production amounted to 2,200 units of product. Based on this information alone:

Select the false statement from the following.

Alleghany Community College operates four departments. The square footage used by each department is shown below. $\begin{array}{lc}\text { Department }&\text {Square Footage }\\\text { Accounting } & 7,000 \\\text { Marketing } & 8,000 \\\text { Technology } & 10,000 \\\text { Sciences } & \underline{7,000}\\\text { Total }& \underline{32,000}\end{array}$ Alleghany's annual building rental cost is $220,000. What amount of rent expense should be allocated to the Technology Department? (Do not round intermediate calculations.)

State University's College of Business is divided into three departments, accounting, marketing, and management. Relevant information for each department is provided below: $\begin{array} { l c c c } \text { Cost Driver } & \text { Accounting } & \text { Marketing } & \text { Management } \\\text { Number of students } & 700 & 400 & 200 \\\text { Number of classes } & 32 & 18 & 14 \\\text { per semester } & & & \\\text { Number of faculty } & \text { 10 } & 12 & 5\end{array}$ The Dean of the College of Business is trying to assign funds from the operating budget to the three departments. Assuming that the chair of each department is trying to attain the highest funding possible for his/her department, which of the following most accurately describes the allocation base that each chair will favor?