1. The process of assigning indirect costs is called

1. directional association.
2. variable costing.
3. cost allocation.
4. joint costing.

2. If managers are not charged for centrally administered services, they are likely to A. seek outside suppliers. B. limit their frivolous use of these services. C. consider the services as free. D. evaluate and consider lower-cost alternatives for the services.

3. An allocation base A. relates the cost pool to the cost objectives. B. is a characteristic that is common to all of the cost objectives. C. ideally uses a cause-and-effect relationship. D. All of the above are true.

4. Service department costs are allocated to producing departments

A. so that the costs can be allocated to the products in the producing departments.

B. because the costs of the service is not material

C. so the service will not be purchased externally

D. all of the above.