Cost allocation methods that provide the most accurate full cost for financial reporting also provide the most accurate information for making decisions within the company. (Points: 2) True False 2. When service departments costs are allocated using actual costs and actual usage, the charge one operating manager receives will depend on the usage of other managers. (Points: 2) True False 3. Allocating fixed costs on a per unit basis will make the managers receiving the allocations perceive the costs as variable. (Points: 2) True False 4. Activity-based management uses benchmarking to compare the cost of an activity in one organization to the cost for a similar activity in another organization (Points: 2) True False 5. An allocation of a predetermined amount that is not affected by changes in the activity level of the organizational unit receiving the allocation is called a(n) (Points: 2) allocation base. unitized cost. lump-sum allocation. cost driver. 6. Maintenance costs at Winter Company are allocated to the production departments based on area occupied. Maintenance costs of $300,000 are budgeted to maintain a 60,000 square foot production area. If the finishing department occupies 25,000 square feet, how much of the maintenance department costs will be allocated to the finishing department? (Points: 2) $125,000 $175,000 $100,000 $5,000 7. Ring Company allocates the net cost of the company cafeteria to production departments using the direct method based on the number of employees in each department. The four production departments in the company have the following number of employees: molding, 25; polishing, 35; engraving, 30; and packaging, 10. There are 5 employees in the cafeteria. The cafeterias net costs total $130,100. What amounts will be allocated to the packaging department? (Points: 2) $1,301 $12,390 $13,010 $26,020 8. Auburn Banking and Loan Company has six service departments (human resources, duplicating, janitorial, accounting, graphic design and food services) whose costs are allocated to the companys two subsidiaries (Auburn Personal Banking and Auburn Business Banking) on the basis of their relative sales. What type of costs will the president of Auburn Business Banking perceive the allocated service department costs to be? (Points: 2) Fixed costs Opportunity costs Direct costs Variable costs 9. Jarme Company makes two products and is implementing an activity-based costing (ABC) system. Previously, all overhead had been applied on the basis of machine hours. The company produces 100,000 units of product D and 5,000 units of product F annually. What is the overhead cost per unit for Product D using ABC? (Points: 2) $63.50 $430 $68 $340 10. Magazine Company uses activity-based costing. The company produces weekly and monthly magazines. The estimated costs and expected activity for each of the activity pools follow: How much is the activity rate for activity 1? (Points: 2) $19.00 $13.06 $18.10 $14.25