Question1

The formula for calculating a predetermined indirect cost rate is:

Select one:

a.

actual indirect costs/actual usage of the cost driver

b.

budgeted indirect costs/actual usage of the cost driver

c.

actual indirect costs/budgeted usage of the cost driver

d.

budgeted indirect costs/budgeted usage of the cost driver

Question2

Which of these cost drivers isnota criteria for allocating costs?

Select one:

a.

standardisation

b.

benefits received

c.

behavioural

d.

fairness

Question3

Which of these statements concerning the determination of the full cost of a cost object isnottrue?

Select one:

a.

indirect costs are allocated via the use of a cost driver

b.

full cost includes only manufacturing costs

c.

overheads are included

d.

direct costs are traced via source documentation

Question4

To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:

Select one:

a.

only variable costs per unit of service

b.

an actual cost allocation rate

c.

a budgeted cost allocation rate

d.

only fixed costs per unit of service

Question5

If the cost object is the cosmetics department of a large department store which of the following is a direct cost?

Select one:

a.

Advertising costs for the store's annual stock take sale

b.

The payroll department manager's yearly bonus payment

c.

Brand specific cosmetic product training

d.

Security staff wages for the store

Question6

Which of the following is least likely to be a cost object for a car manufacturer:

Select one:

a.

Charlie's Car Company - a long term customer

b.

Gordon Lee - a part time employee in the cafeteria

c.

Human Resources Department

d.

Assembly Division

Question7

Which of these isnotan uncertainty when allocating support department costs?

Select one:

a.

identifying the appropriate cost driver

b.

knowing which departments are support departments and which are operating departments

c.

selecting the most appropriate allocation method

d.

deciding whether to use dual or single rate allocations

Question8

The distinction between direct costs and indirect costs depends on their traceability to:

Select one:

a.

a cost object

b.

an activity

c.

a product

d.

a manufacturing operation

Question9

The allocation method for support department costs that can manipulate the costs allocated by changing the order of the support department cost allocation is:

Select one:

a.

the direct method

b.

the dual-rate method

c.

the reciprocal method

d.

the step-down method

Question10

If the cost object is the production department in a large manufacturing firm which of these would be a direct cost?

Select one:

a.

Research and development costs for future products

b.

A share of the building space occupied based on percentage of floor space used

c.

The raw materials cost of the products produced

d.

The payroll department manager's yearly bonus payment

Question11

Which of these departments wouldnotbe considered a support department for a manufacturer of bathroom fittings?

Select one:

a.

laminating department

b.

computing departments

c.

security

d.

accounts

Question12

The method that allocates support department costs by ignoring all services rendered between support departments is:

Select one:

a.

the direct method

b.

the dual rate method

c.

the single rate method

d.

the step-down method

Question13

In determining the amount of indirect costs to be allocated to the cost object the first step is:

Select one:

a.

to select a cost driver

b.

to decide on the number of cost pools

c.

to develop a cost allocation formula

d.

to develop a predetermined cost rate

Question14

In relation to product costing the indirect cost rate is:

Select one:

a.

the input or activity that causes changes in total costs for a cost object

b.

the method used to allocate the costs of each support department to the operating departments

c.

added to direct costs to calculate the full product cost

d.

the rate used to assign indirect costs to the cost object

Question15

Paws Pet Resort and Spa is located in Christchurch. The company employs three pet attendants, four pet groomers and two front office staff who book appointments and keep records. The spa provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys.

If the cost object is cost per day of boarding, which of the following is an indirect cost?

Select one:

a.

Cleaning costs for the kennels

b.

Front office staff salaries

c.

Maintenance on the kennels

d.

Pet food