Question 1

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Accepted Answer

A)   Direct and variable
B)   Direct and fixed
C)   Indirect and variable
D)   Indirect and fixedE) A) and B)
F) A) and C)

Question 2

Bank's Department Store has three departments: Men's, Women's and Children's. The store incurred $50,000 of store rental costs during the current year. The departments identified the following cost drivers:   Men’s  Women’s Children’s  Labor dollars  $ 530,000 $775,000$240,000 Number of employees 10204 Square footage 3,0008,0001,000 Number of sales transactions 300.000900.00090.000\begin{array}{lrrr}&	ext { Men&#x27;s }&	ext { Women&#x27;s}&	ext { Children&#x27;s }\	ext { Labor dollars } & 	ext { \$ 530,000 } & \$ 775,000 & \$ 240,000 \	ext { Number of employees } & 10 & 20& 4 \	ext { Square footage } & 3,000 & 8,000 & 1,000\	ext { Number of sales transactions } & 300.000 & 900.000 & 90.000\end{array} Labor dollars  Number of employees  Square footage  Number of sales transactions ​ Men’s  $ 530,000 103,000300.000​ Women’s$775,000208,000900.000​ Children’s $240,00041,00090.000​   Using the most appropriate cost driver, how much rental cost should be allocated to the Women's Department? (Do not round intermediate calculations. Round final answer to the nearest dollar.)

Accepted Answer

A)   $33,333
B)   $29,412
C)   $25,081
D)   $34,884 E) B) and D)
F) A) and B) A

Question 3

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following best describes the term used to assign indirect costs to a cost object?

Accepted Answer

A)   Cost tracing
B)   Cost allocation
C)   Cost assignment
D)   Cost accumulationE) A) and D)
F) B) and C)

Question 5

Indirect costs are often pooled, and not allocated individually because:

Accepted Answer

A)   individual allocation would be more timely.
B)   individual allocation would be more accurate.
C)   individual allocation would be tedious.
D)   the benefits of individual allocation of indirect costs are greater than the costs.E) A) and B)
F) A) and C)

Question 6

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:

Accepted Answer

A)   Products were costed accurately during the year.
B)   Products were overcosted during the year.
C)   Products were undercosted during the year.
D)   The answer cannot be determined from the information provided.E) A) and D)
F) B) and C)

Question 7

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Accepted Answer

A)   Direct and variable
B)   Direct and fixed
C)   Indirect and variable
D)   Indirect and fixedE) B) and D)
F) All of the above A

Question 8

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Accepted Answer

A) True 
 B)False

Question 9

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:

Accepted Answer

A)   $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
B)   $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
C)   $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent.
D)   None of the answers are correct.E) A) and B)
F) A) and D)

Question 10

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Accepted Answer

A)   Direct costs only.
B)   Both direct and indirect costs.
C)   Neither direct nor indirect costs.
D)   Indirect costs but not direct costs.E) B) and D)
F) None of the above

Question 11

Cost allocation involves:

Accepted Answer

A)   Identifying a cost driver for each cost to be allocated.
B)   Calculating an allocation rate for each cost to be allocated.
C)   Multiplying the allocation rate by the weight of the cost driver.
D)   All of the answers are correct.E) A) and D)
F) B) and C)

Question 12

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Accepted Answer

A) True 
 B)False

Question 13

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Accepted Answer

A)   Such costs cannot be traced to objects in a cost-effective manner.
B)   Such practice results in a more accurate accumulated cost for the object.
C)   Generally accepted accounting principles require some costs to be treated as indirect.
D)   All of the answers are correct.E) B) and C)
F) None of the above

Question 14

Selection of a cost driver depends on:

Accepted Answer

A)   The availability of information for both the cost and the potential cost driver.
B)   A cause-and-effect relationship between the cost driver and the cost.
C)   Judgment of management.
D)   All of the answers are correct.E) C) and D)
F) B) and D)

Question 15

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Accepted Answer

A)   Direct and variable
B)   Direct and fixed
C)   Indirect and variable
D)   Indirect and fixedE) None of the above
F) B) and C) A

Question 16

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Accepted Answer

A)   The salary is a fixed cost that is directly traceable to the cost of making hamburgers.
B)   The salary is a variable cost that is directly traceable to the cost of operating a specific restaurant.
C)   The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant.
D)   None of the answers are correct.E) All of the above
F) None of the above

Question 17

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

Accepted Answer

A)   The cost of heating and air-conditioning.
B)   The cost of supplies.
C)   The cost of the department manager's salary.
D)   Rent on the store building.E) A) and B)
F) A) and C)

Question 18

Which of the following statements is incorrect?

Accepted Answer

A)   A predetermined overhead rate may be used to allocate overhead costs when volume varies during the year.
B)   A predetermined overhead rate is calculated using actual cost and volume data.
C)   A predetermined overhead rate is calculated by dividing costs by volume, using a measure of volume such as direct labor hours or direct materials cost.
D)   A company may need to allocate overhead costs to products to make pricing decisions for the products.E) B) and C)
F) All of the above

Question 19

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:

Accepted Answer

A)   $450 of the property tax cost should be allocated to the January production.
B)   $1,500 of the property tax cost should be allocated to the January production.
C)   $6,000 of the property tax cost should be assigned to the January production.
D)   $500 of the property tax cost should be allocated to the January production.E) None of the above
F) All of the above

Question 20

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $190,000 a year. It is estimated that these employees move 700,000 pounds of material per year. If 70,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)

Accepted Answer

A)   $19,000
B)   $13,000
C)   $26,000
D)   $20,000E) None of the above
F) A) and B)

Exam 12: Cost Accumulation, Tracing, and Allocation

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Correct Answer
verified

Correct Answer
verified
A

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

Correct Answer
verified

Which of the following best describes the term used to assign indirect costs to a cost object?

Correct Answer
verified

Indirect costs are often pooled, and not allocated individually because:

Correct Answer
verified

Correct Answer
verified

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Correct Answer
verified
A

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Correct Answer
verified

Correct Answer
verified

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Correct Answer
verified

Cost allocation involves:

Correct Answer
verified

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Correct Answer
verified

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Correct Answer
verified

Selection of a cost driver depends on:

Correct Answer
verified

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Correct Answer
verified
A

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
verified

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:

Correct Answer
verified

Correct Answer
verified

Exam 12: Cost Accumulation, Tracing, and Allocation

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. The company expects to make 2,000 comforters during the current year. With respect to the comforters, how would the hourly wages of sewing machine operators be classified?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

It is possible that the same cost might be direct with respect to one cost object but indirect with respect to another cost object.

Correct AnswerverifiedShow Answer

Which of the following best describes the term used to assign indirect costs to a cost object?

Correct AnswerverifiedShow Answer

Indirect costs are often pooled, and not allocated individually because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Correct AnswerverifiedA

Each indirect cost should be allocated to products individually to provide the most useful cost information.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Managers of a discount store chain are considering whether to add a new auto service department. In reaching this decision, the managers should consider:

Correct AnswerverifiedShow Answer

Cost allocation involves:

Correct AnswerverifiedShow Answer

The selection of the most appropriate cost driver often requires considerable judgment in the absence of a strong cause-and-effect relationship.

Correct AnswerverifiedShow Answer

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Correct AnswerverifiedShow Answer

Selection of a cost driver depends on:

Correct AnswerverifiedShow Answer

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. During the upcoming year, the company expects to make 2,000 comforters. With respect to the comforters, how would the fabric used to make the comforters be classified?

Correct AnswerverifiedA

Which of the following statements is true regarding the salary of the manager of a fast-food hamburger restaurant?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified