Hi.

TRUE OR FALSE. State your explanation.

11.A joint product with minimal value relative to the other joint products is known as a by-product.

12. The reciprocal-services method is less accurate than the direct and step-down methods.

13. The reciprocal-services method cannot be combined with the dual-allocation approach.

Multiple Choice Questions. State your explanation.

14.Which of the following would be considered a service department for an airline?

A.Maintenance.

B.Information Systems.

C.Purchasing.

D.Flight Catering.

E.All of the answers are correct.

15.Which of the following would not be considered a service department in a hospital?

A.Security.

B.Cardiac Care.

C.Patient Records.

D.Accounting.

E.Human Resources.

16.Consider the following statements about service department costs:

I. The costs of the Human Resources Department in a manufacturing organization must be allocated to production departments in order to achieve a correct costing of inventory.

II. The allocation of service department costs requires that an organization select both an allocation base and an allocation method.

III. Service department cost allocations are more relevant for firms involved in service industries (e.g., repair, health care) than for those involved with manufacturing.

Which of the above statements is (are) correct?

A.I only.

B.II only.

C.I and II.

D.II and III.

E.I, II, and III.

17.Which of the following methods ignores the fact that some service departments provide service to other service departments?

A.Direct method.

B.Indirect method.

C.Step-down method.

D.Reciprocal method.

E.Dual-cost allocation method.

18.Which of the following methods fully recognizes the fact that some service departments provide service to other service departments?

A.Direct method.

B.Indirect method.

C.Step-down method.

D.Reciprocal method.

E.Dual-cost allocation method.

19.Which of the following methods recognizes the fact that fixed and variable service department costs should be allocated separately?

A.Direct method.

B.Indirect method.

C.Step-down method.

D.Reciprocal method.

E.Dual-cost allocation method.

20.Consider the following statements about the direct method of service department cost allocation:

I. Under the direct method, all service department costs are eventually allocated to production departments.

II. The order in which service department costs are allocated to production departments is important.

III. Once a service department's costs have been allocated, no costs are re-circulated back to that department.

Which of the above statements is (are) correct?

A.I only.

B.II only.

C.I and II.

D.I and III.

E.I, II, and III.

-ma