1. In allocating service center costs to production departments, the choice of allocation basis will have no effect on the performance evaluations of the managers of each of the production departments.

True

False

2. In the FIFO method of process costing, the physical units, the equivalent units, and the costs associated with beginning inventory are treated as a special, separately identifiable layer from the corresponding physical units, equivalent units, and costs associated with items that were both started and completed during the current period.

True False

3. The method for expressing partially completed units in terms of whole complete units makes use of the concept of Equivalent Units and is found in process costing approaches.

True

False

4. In process costing, materials equivalent units are never figured separately from conversion equivalent units, as it is impossible for timing differences between when materials costs and conversion costs go into the product to exist.

True False

5. In process costing, average unit cost is determined by using total units as the numerator at the top of the fraction and by using total manufacturing costs as the denominator at the bottom of the fraction with which it is calculated.

True False

6. Job order costing works best where one standardized product of relatively low value is being produced for long, continuous production runs.

True

False

7. To compute the balance in ending Work-In-Process Inventory for a firm that uses a job order costing system, the costs on the job cost sheets for all jobs that have been started but are not yet complete are summed.

True

False

8. In a job order costing system, overhead should be applied only when the job is at the point of completion.

True False

9. Weighted Average Method is the only method of process costing that is acceptable for companies to use for internal reporting.

True False

10. When allocating costs from any cost pool or service center, the sum of the various amounts allocated should equal the total cost to be allocated.

True

False

11. The Job Cost Sheet is the only form of documentation that is permitted in a job order costing system.

True False

12. The data contained in this item description is used in more than one item in a set of interrelated items on this examination. Together those items collectively ask a full set of relevant questions about one cost allocation problem. Students are encouraged to work the ENTIRE cost allocation problem on scratch paper using the given data provided below before attempting to respond to any of the items which are based upon this common problem description and the data provided. Yolksbaggin has one cost pool (General Plant), one service department (Sanitation), and two production departments (Collection and Packaging), plus it uses the STEP (sequential) method of cost allocation to allocate costs (in the order that they are mentioned above) to the two production departments. General plant, Sanitation, Collection, and Packaging, have departmental costs before allocation of $80,000, $192,000, $600,000, and $900,000 respectively. General plant costs are allocated on the basis of number of direct labor hours worked. Sanitation, Collection, and Packaging worked 2000, 8000, and 10,000 direct labor hours respectively this period. Sanitation costs are allocated on the basis of square footage occupied by a department. The entire factory is 220,000 square feet with Sanitation occupying the first 20,000 square feet of that total, while Collection and Packaging each occupy half of the remaining square footage. How much of the General Plant cost should be allocated to Sanitation?

$80,000

$4

$4,000

$0

none of the above

13. The data contained in this item description is used in more than one item in a set of interrelated items on this examination. Together those items collectively ask a full set of relevant questions about one cost allocation problem. Students are encouraged to work the ENTIRE cost allocation problem on scratch paper using the given data provided below before attempting to respond to any of the items which are based upon this common problem description and the data provided. Yolksbaggin has one cost pool (General Plant), one service department (Sanitation), and two production departments (Collection and Packaging), plus it uses the STEP (sequential) method of cost allocation to allocate costs (in the order that they are mentioned above) to the two production departments. General plant, Sanitation, Collection, and Packaging, have departmental costs before allocation of $80,000, $192,000, $600,000, and $900,000 respectively. General plant costs are allocated on the basis of number of direct labor hours worked. Sanitation, Collection, and Packaging worked 2000, 8000, and 10,000 direct labor hours respectively this period. Sanitation costs are allocated on the basis of square footage occupied by a department. The entire factory is 220,000 square feet with Sanitation occupying the first 20,000 square feet of that total, while Collection and Packaging each occupy half of the remaining square footage. How much of the Sanitation cost (after any prior allocations to Sanitation) should be allocated to the Collection production department?

$96,000

$10,000

$8,272.72

$90,909.09

$100,000