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Exam 4: Cost Accumulation,Tracing,and Allocation

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Question 81

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Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year.It is estimated that these employees move 600,000 pounds of material per year.If 60,000 pounds are moved in March,how much of the material handling cost should be assigned to products made in March? (Do not round your intermediate calculations. )

A) $36,000
B) $24,000
C) $50,000
D) $38,000

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

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Question 82

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Indicate whether each of the following statements is

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Cost accumulation refers to identifying ...

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Question 83

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Cost objects may be:

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.

Jiminez Company paid its annual property tax of $6,000 on its manufacturing facility in January.The company expects to make 4,000 units of product during the year.During January,300 units of product were produced.Based on this information:

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

How do you account for costs incurred before the split-off point? How do you account for costs incurred after the split-off point?

Southeast Manufacturing Company has identified the following cost objects: Cost Object 1: The cost of operating the finishing department Cost Object 2: The cost of a particular product made in June Cost Object 3: The cost of operating the factory With respect to these cost objects,the cost of the salary of the supervisor of the finishing department is directly traceable to cost objects:

The management accountant at Morrison,Inc.provided the following estimated costs for producing 2,500 units of a specialty product manufactured by the firm: $\begin{array}{|l|r|}\hline \text { Direct Materials } & \$ 10,000 \\\hline \text { Direct Labor (1 hour per unit) } & 5,000 \\\hline \text { Unit-level support costs } & 10,000 \\\hline \text { Batch level support costs } & 5,000 \\\hline \text { Product-level support costs } & 3,000 \\\hline \text { Faclity-level support costs } & 7,000 \\\hline\end{array}$ The company believes that direct labor hours are the most appropriate cost driver for assigning overhead costs to its product. Required: 1)Compute the predetermined overhead rate for this company. 2)Compute the specialty product's total estimated cost per unit. 3)Why do firms assign overhead costs using a predetermined overhead rate instead of assigning actual costs?

Cobalt Company management has identified the following cost objects: Cost Object 1: The cost of operating the finishing department Cost Object 2: The cost of operating the factory Cost Object 3: The cost of a particular product made in June With respect to these cost objectives,how would rent paid by the finishing department for storage space be classified? $\begin{array}{lll} &\underline {\text { Object } 1}& \underline {\text { Object } 2}& \underline {\text { Object } 3}\\A. &\text { Direct } & \text { Direct } & \text { Direct } \\B.&\text { Direct } & \text { Direct } & \text { Indirect } \\C.&\text { Indirect } & \text { Indirect } & \text { Indirect } \\ D.&\text { Indirect } & \text { Indirect } & \text { Direct }\end{array}$

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How are indirect costs assigned to cost objects? Are they traced to cost objects?

A manager believes that the number of units sold drives the company's selling costs.The number of units sold would be referred to as the cost driver.

Overhead costs include:

Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis.At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated.Based on this information alone:

Indicate whether each of the following statements is