Cost Exam 2 with all Correct & 100% Verified Answers |
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The direct method of departmental cost allocation is the simplest of the three methods because
it only considers the reciprocal flows partially.
T/F ✔Correct Answer-False
Joint products are usually made from the same raw materials.
T/F ✔Correct Answer-True
Transfer pricing is used for products traded in the competitive markets.
T/F ✔Correct Answer-False
Companies centralize common service to reduce cost and improve quality at the same time.
T/F ✔Correct Answer-True
The objectives of cost allocation are to:
A. Connect, communicate, and discern information.
B. Accurately define, divide, and spread direct costs.
C. Motivate effort, provide incentives, and fairly determine rewards.
D. Value, measure, and interpret cost data. ✔Correct Answer-C. Motivate effort, provide
incentives, and fairly determine rewards.
The most clear and unbiased basis for cost allocation exists when which one of the following can
be determined?
A. Equity Share
B. Ability-to-Bear
C. Cause-and-effect relationship
D. Benefit received ✔Correct Answer-C. Cause and effect relationship
Which of the following methods considers all reciprocal flows between service departments
through simultaneous equations?
A. Direct Method
B. Reciprocal Method
C. The net realizable value method
D. Step Method ✔Correct Answer-B. Reciprocal Method
, Allocation of service department costs to producing departments is the most complex of the
allocation phase of departmental cost allocation because of the likely presence of:
A. Reciprocal flows
B. Non-value adding activities
C. Repetitive steps
D. Manager bias ✔Correct Answer-A. Reciprocal flows
The reciprocal method of departmental cost allocation is preferred over the step method
because it takes into account all the reciprocal flows between:
A. The service departments
B. The producing departments
C. Competing departments
D. Similar, but separate products ✔Correct Answer-A. The service departments
In making decisions about whether to sell or further process joint products or by-products,
allocation of common or joint costs is:
A. Irrelevant and should be ignored
B. Useful depending on the method chosen
C. Useful
D. Essential ✔Correct Answer-A. Irrelevant and should be ignored
Which one of the following methods of allocating joint costs allocates joint costs to joint
products on the basis of estimated sales values at the split-off point?
A. Sales value at split-off method
B. Net realizable value method
C. Physical measure method
D. Net sales value method ✔Correct Answer-B. Net realizable value method
Which of the following is not one of the objectives of cost allocation?
A. Identify product constraints
B. Motivate managers to exert a high level of effort
C. Provide the right incentive for managers to make the right decisions
D. Provide useful departmental and product costs ✔Correct Answer-A. Identify product
constraints
Net Realizable Value (NRV) of a product is:
A. split off costs - product margin - additional processing and selling cost
B. Cost allocation plus separable cost
C. Profit at split-off + additional processing and selling cost
D. Ultimate sales value - additional processing and selling cost ✔Correct Answer-D. Ultimate
sales value - additional processing and selling cost
The point in a joint production process at which individual products can be identified for the
first time is called the:
Actual Complete Update |Already Graded A+
The direct method of departmental cost allocation is the simplest of the three methods because
it only considers the reciprocal flows partially.
T/F ✔Correct Answer-False
Joint products are usually made from the same raw materials.
T/F ✔Correct Answer-True
Transfer pricing is used for products traded in the competitive markets.
T/F ✔Correct Answer-False
Companies centralize common service to reduce cost and improve quality at the same time.
T/F ✔Correct Answer-True
The objectives of cost allocation are to:
A. Connect, communicate, and discern information.
B. Accurately define, divide, and spread direct costs.
C. Motivate effort, provide incentives, and fairly determine rewards.
D. Value, measure, and interpret cost data. ✔Correct Answer-C. Motivate effort, provide
incentives, and fairly determine rewards.
The most clear and unbiased basis for cost allocation exists when which one of the following can
be determined?
A. Equity Share
B. Ability-to-Bear
C. Cause-and-effect relationship
D. Benefit received ✔Correct Answer-C. Cause and effect relationship
Which of the following methods considers all reciprocal flows between service departments
through simultaneous equations?
A. Direct Method
B. Reciprocal Method
C. The net realizable value method
D. Step Method ✔Correct Answer-B. Reciprocal Method
, Allocation of service department costs to producing departments is the most complex of the
allocation phase of departmental cost allocation because of the likely presence of:
A. Reciprocal flows
B. Non-value adding activities
C. Repetitive steps
D. Manager bias ✔Correct Answer-A. Reciprocal flows
The reciprocal method of departmental cost allocation is preferred over the step method
because it takes into account all the reciprocal flows between:
A. The service departments
B. The producing departments
C. Competing departments
D. Similar, but separate products ✔Correct Answer-A. The service departments
In making decisions about whether to sell or further process joint products or by-products,
allocation of common or joint costs is:
A. Irrelevant and should be ignored
B. Useful depending on the method chosen
C. Useful
D. Essential ✔Correct Answer-A. Irrelevant and should be ignored
Which one of the following methods of allocating joint costs allocates joint costs to joint
products on the basis of estimated sales values at the split-off point?
A. Sales value at split-off method
B. Net realizable value method
C. Physical measure method
D. Net sales value method ✔Correct Answer-B. Net realizable value method
Which of the following is not one of the objectives of cost allocation?
A. Identify product constraints
B. Motivate managers to exert a high level of effort
C. Provide the right incentive for managers to make the right decisions
D. Provide useful departmental and product costs ✔Correct Answer-A. Identify product
constraints
Net Realizable Value (NRV) of a product is:
A. split off costs - product margin - additional processing and selling cost
B. Cost allocation plus separable cost
C. Profit at split-off + additional processing and selling cost
D. Ultimate sales value - additional processing and selling cost ✔Correct Answer-D. Ultimate
sales value - additional processing and selling cost
The point in a joint production process at which individual products can be identified for the
first time is called the:
