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Enhanced Quizzes
(See related pages)
Results Reporter
Out of 30 questions, you answered 9 correctly with a final grade of 30%
9 correct (30%)
21 incorrect (70%)
0 unanswered (0%)
Your Results:
The correct answer for each question is indicated by a .
1
INCORRECT
The direct method of service department cost allocation may be described as a method of service department cost allocation in
which service department costs are allocated directly to the production departments.
A) TRUE
B) FALSE
Feedback:
LO 01
The direct method of service department cost allocation is a method of service department cost allocation in which
service department costs are allocated directly to the production departments.
2
INCORRECT
The dual cost allocation method of allocating service department costs is described as a method of service department cost
allocation in which service department costs are allocated first to service departments and then to production departments.
A) TRUE
B) FALSE
Feedback:
LO 01
The step-down method of allocation service department cost is a method of service department cost allocation in
which service department costs are allocated first to service departments and then to production departments.
3 CORRECT
The dual cost allocation method of allocating service department costs is described as an allocation approach that allocates
variable costs in proportion to short-run usage and allocates fixed costs in proportion to long-run usage.
A) TRUE
B) FALSE
Feedback:
LO 02
Under dual-cost allocation, variable costs are allocated on the basis of short-run usage of the service departments
output; fixed costs are allocated on the basis of long-run usage of the service departments output.
4
INCORRECT
Under dual cost allocation, the managers of using departments might tend to understate their expected long-run service needs
from the providing department(s).
A) TRUE
B) FALSE
Feedback:
LO 02
This is a major behavioral problem with dual cost allocation, since typically, the estimates of the long-run service
needs are generated by the managers of the using departments.
5 CORRECT
One advantage of changing from a traditional-costing system to an activity-based-costing (ABC) system is that activity costs
are assigned to activity cost pools rather than to service departments.
A) TRUE
B) FALSE
Feedback:
LO 03
Such assignment of costs is an advantageABC systems provide a breakdown of costs that is much finer than a
breakdown by departments. This provides a much more accurate cost for each of the organization's products or
services.
6 CORRECT
A production process in which a Ponderosa pine log is cut into various dimensions and grades of lumber is an example of a joint
production process.
A) TRUE
B) FALSE
Feedback:
LO 04
A joint production process results in two or more joint products.
7
INCORRECT
The split-off point is where the joint products become separate and identifiable products in a joint production process.
A) TRUE
B) FALSE
Feedback:
LO 05
The split-off point occurs when the joint products become separate, identifiable products in a joint production process.
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8 CORRECT
The dairy industry's milk production can result in the production of several joint products.
A) TRUE
B) FALSE
Feedback:
LO 04
A joint product is the output of a joint production process. Processing milk can result in whole milk, skim milk, cream,
cheese, or other milk-based products.
9
INCORRECT
The relative-sales-value method of joint cost allocation is based on the relative sales value of each joint product at the split-off
point, but the net-realizable-value method of joint cost allocation is based, in part, on any separable costs incurred after the
split-off point.
A) TRUE
B) FALSE
Feedback:
LO 05
The relative-sales-value method uses the relative sales value of each joint product at the split-off point to allocate joint
costs. The net-realizable-value method requires subtracting separable costs after the split-off point from the final sales
price to determine the relative value for allocating joint costs.
10
CORRECT
The sawdust, bark, and wood chips that result from processing pine logs might be considered by-products.
A) TRUE
B) FALSE
Feedback:
LO 05
While there is a market for these products (especially in light of the impact of environmental controls on burning
waste products), if their values (sales prices) are relatively low to the value of other joint products, they would be
considered by-products.
11
INCORRECT
Which of the following is a service department?
A) Human Resources Department
B) Accounting Department
C) Maintenance Department
D) Administrative Department
E) All of the above
Feedback:
LO 01
A service department is a unit in an organization that is not involved directly in producing the organizations goods or
services.
12
INCORRECT
In which method of service department cost allocation are service department costs allocated directly to production
departments?
A) Direct method.
B) Dual cost method.
C) Reciprocal-services method.
D) Step-down method.
E) None of the above
Feedback:
LO 01
The direct method of service department cost allocation is described as a method of service department cost allocation
in which service department costs are allocated directly to production departments.
13
INCORRECT
Consider the following:
Use the direct method of service department cost allocation and determine the amount of the service department costs that
will be charged to the Furniture Department.
A) $ 62,150
B) $ 30,400
C) $141,250
D) $75,500
E) $ 45,100
Feedback:
LO 01
Power cost per kilowatt-hour is $3.80 (= $72,200/(5,000 + 8,000 + 6,000)). Maintenance cost per work order is $150
(= $45,000/(100 + 150 + 50)). Personnel cost per employee is $370 (= $24,050/(30 + 25 + 10)). Service department
costs allocated to the Furniture Department is $45,100 (= (5,000 x $3.80) + (100 x $150) + (30 x $370)).
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14
INCORRECT
The method of service department cost allocation in which service department costs are allocated first to service departments
and then to production departments is called the
A) Direct method.
B) Dual cost method.
C) Reciprocal-services method.
D) Step-down method.
E) None of the above
Feedback:
LO 01
The step-down method of service department cost allocation can be described as a method of service department cost
allocation in which service department costs are allocated first to service departments and then to production
departments.
15
CORRECT
Consider the following:
Power Department costs are $26,000. Maintenance Department costs are $30,000. Personnel Department costs are $4,000.
The Personnel Department provides services to all departments. Use the step-down method of service department cost
allocation and determine the mount of service department costs (Personnel, Power, and Maintenance) will be charged to the
Furniture Department.
A) $41,210
B) $31,710
C) $18,790
D) $28,290
E) $50,500
Feedback:
LO 01
Personnel cost per employee: $4,000/(30 + 10 + 6 + 4) = $80. Power cost per KW hour: [($26,000 + (6 x
$80)]/(5,180 + 8,060) = $2.00. Maintenance cost per work order: [$30,000 + (4 x $80)]/(100 + 60) = $189.50.
16
INCORRECT
Which method of service department cost allocation accounts for the mutual provision of reciprocal services among all service
departments?
A) Direct method.
B) Dual cost method.
C) Reciprocal-services method.
D) Joint-cost method.
E) Both (A) and (D).
Feedback:
LO 01
The reciprocal-services method of service department cost allocation is described as a method of service department
cost allocation that accounts for the mutual provision of reciprocal services among all service departments.
17
INCORRECT
Which method of service department cost allocation allocates variable costs in proportion to short-run usage and allocates fixed
costs in proportion to long-run usage?
A) Direct method.
B) Joint-cost method.
C) Reciprocal-services method.
D) Dual cost allocation.
E) Both (C) and (D).
Feedback:
LO 02
Dual cost allocation of service department costs is described as an allocation approach that allocates variable costs in
proportion to short-run usage and allocates fixed costs in proportion to long-run average usage.
18
INCORRECT
Which method of service department cost allocation provides the more accurate method of department cost allocation and does
not ignore the fact that some service departments may perform services for other service departments?
A) Direct method.
B) Step-down method.
C) Reciprocal-services method.
D) Dual cost allocation.
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E)
None of the above
Feedback:
LO 02
The reciprocal-services method of department cost allocation is a more accurate method of department cost allocation
since it takes into account the mutual provision of reciprocal services, and their costs, between service departments.
While the step-down method allocates costs to some service departments, it ignores reciprocal services between
service departments.
19
INCORRECT
Which method of service department cost allocation allocates fixed and variable costs separately in service department cost
allocation?
A) Direct method.
B) Step-down method.
C) Reciprocal-service method.
D) Dual cost allocation approach.
E) None of the above
Feedback:
LO 02
The dual cost allocation approach, where service department costs are allocated on the relative use of fixed and
variable costs, works with either the direct method or the step-down method of service department cost allocation.
20
CORRECT
When budgeted service department costs are allocated to production departments (much like the allocation of manufacturing
overhead to the Work in Process account), any variance between allocated budgeted costs and actual costs is called a variance.
Which is the correct way to dispose of this variance?
A) Allocate it among the production departments on some basis.
B) Close it to the Cost of Goods Sold account.
C) Close it against the period's income.
D) Close it to the Work-in-Process account.
E) Allocate between the Work-in-Process account and the Finished Goods account.
Feedback:
LO 02
Variances between allocated budgeted service department costs and actual service department costs are closed to the
period's income. Keeping a record of the variances for analysis of the causes of the variances helps control costs.
21
INCORRECT
Which of the following statements is true?
A) Under the two-stage allocation of department overhead, departments play a key role as intermediate cost objects.
B) Under an ABC approach to department overhead, activities play a key role as intermediate cost objects.
C) The breakdown of costs by activity in an ABC system is much finer than a breakdown by departments.
D) All of the above are true.
E) Only (A) and (B) are true.
Feedback:
LO 03
The breakdown of costs by activity in an ABC system generally will provide a much more accurate cost for each of the
organizations products or services.
22
INCORRECT
Which of the following statements is true?
A) A joint production process results in two or more products.
B) The point at which joint products are sold is called the split-off point.
C) Joint costs are the costs associated with joint products after the split-off point.
D) The separable cost of processing is the cost of converting a raw material into joint products.
E) Both (A) and (C) are true
Feedback:
LO 04
A joint production process results in two or more products called joint products. The point at which the joint products
become separately identifiable in called the split-off point. Joint cost is the cost of the input and the joint production
process. The separable cost of processing is the cost that occurs when additional production activity and cost is added
to the joint product after the point of split-off.
23
INCORRECT
Which method of joint cost allocation allocates the joint cost to the joint products in proportion to the net realizable value of
each joint product?
A) Net-realizable-value method.
B) Physical-units method.
C) Relative-sales-value method.
D) Physical-value method.
E) By-products-value method.
Feedback:
LO 05
The net-realizable-value method of joint cost allocation is described as a method in which joint costs are allocated to
the joint products in proportion to the net realizable value of each joint product.
24
CORRECT
Which method of joint cost allocation allocates the joint cost to the joint products in proportion to their physical quantities?
A) Net-realizable-value method.
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B)
Physical-units method.
C) Relative-sales-value method.
D)
Physical-value method.
E) Relative-gross-profit method.
Feedback:
LO 05
The physical-units method of joint cost allocation is described as a method in which joint costs are allocated to the
joint products in proportion to their physical quantities.
25
INCORRECT
Which method of joint cost allocation allocated the joint cost to joint products in proportion to their total sales values at the
split-off point?
A) Net-realizable-value method.
B) Physical-units method.
C) Relative-sales-value method.
D) Physical-value method.
E) Relative-gross-profit method.
Feedback:
LO 05
The relative-sales-value method of joint cost allocation is described as a method in which joint costs are allocated to
joint products in proportion to their total sales values at the split-off point.
26
CORRECT
Consider the following:
Joint product costs are $45,000. Use the physical-units method of joint product cost allocation and determine the joint product
cost allocated to Joint Product A at the split-off point.
A) $ 9,000
B) $18,000
C) $27,000
D) $40,000
E) $23,000
Feedback:
LO 05
Under the physical-units method, joint product costs are allocated on the relative yield of the raw material. Allocated
joint cost to Product A is $18,000 (= (2,000/(2,000 + 3,000)) x $45,000). Allocated joint cost to Product B is $27,000
(= (3,000/(2,000 + 3,000)) x $45,000).
27
INCORRECT
Consider the following:
Joint product costs are $45,000. Use the relative-sales value method of joint product cost allocation and determine the joint
product cost of Product A at the split-off point.
A) $18,000
B) $14,143
C) $14,500
D) $15,400
E) $21,600
Feedback:
LO 05
Under the relative-sales-value method, joint product costs are allocated on the relative sales value at the split-off
point. The joint cost allocated to Product A: is $21,600 (= ($24,000/($24,000 + $26,000)) x $45,000). The joint cost
allocated to Product B is $23,400 (= ($26,000/($24,000 + $26,000)) x $45,000).
28
INCORRECT
Consider the following:
Joint product costs are $45,000. Use the net-realizable-value method of joint product cost allocation and determine the joint
product cost of Product A at the split-off point.
A) $30,857
B) $14,443
C) $14,143
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D) $18,500
E) $14,150
Feedback:
LO 05
The total net-realizable-value of the products is $70,000 (= ($34,000 - $12,000) + ($51,000 - $3,000)). The allocated
joint cost to Product A is $14,143 (= [($34,000 - $12,000)/$70,000] x $45,000). The allocated joint cost to Product B
is $30,857 (= [($51,000 - $ 3,000)/$70,000] x $45,000).
29
INCORRECT
Consider the following:
Joint product costs are $5,000. Use the net-realizable-value method of joint product cost allocation and determine the sales
value of the final products of Product A and Product B.
A) $40,000 and $30,000, respectively
B) $68,000 and $17,000, respectively
C) $36,000 and $29,000, respectively
D) $28,000 and $42,000, respectively
E) $30,000 and $30,000, respectively
Feedback:
LO 05
Schedule of Costs and Sales Values:
($4,000 + $16,000)/$16,000 = 4/5. $4,000 + $16,000)/$4,000 = 1/5.
30
INCORRECT
Consider the following:
Using the net-realizable-value method, determine the dollar amount of joint cost allocated to Joint Product B.
A) $2,101
B) $1,100
C) $1,020
D) $1,300
E) $2,700
Feedback:
LO 05
Net-realizable-value method
$800/($800 + $1,700) = 32%. $1,700/($800 + $1,700) = 68%. $1,500 x 68% = $1,020.
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