Question 20

Kelly's Wood Shop produces wood chips and sawdust in a joint manufacturing process - not sure why.... One jointly produced batch yields 3,000 cubic yards of woodchips and 10,000 cubic yards of sawdust. The estimated cost per batch is $24,800. Management has decided that only 2 cubic yards of sawdust are produced during the same time it takes to produce 10 cubic yards of woodchips. Based on this information, allocate the joint cost of production for 1 batch to the sawdust using the Weighted Average Method.

$9,920

$19,100, rounded

$5,700 rounded

$14,880

Question 19

Three products result from a joint production process. Product A - 100 units, Product B - 100 units and Product C - 50 units. Using the physical units method, what percent of the joint costs will be allocated to Product B?

50 %

40%

60 %

Cannot be determined.

Question 18

Which Support Department allocation method is considered to generally be the most accurate?

Reciprocal Services Method

The Direct Method

The Sequential Method

The Zanzibar Method

Question 17

KneeGuard, Inc. uses the Direct Method to allocate support department costs. The Service Departments are Accounting and Custodial services. Production departments are Parts and Assembly. Initial cost distributions to each department are as follows: Accounting = $140,000; Custodial = $720,000; Parts = $7500,000 and Assembly = $440,000.

Accounting Custodial Parts Assembly

Square feet 800 1,000 6,000 2,000

People 4 8 15 9

KneeGuard uses # people as the cost driver for Accounting and square footage for Custodial costs. What will be the percentage of Custodial costs allocated to Parts?

75%

25%

61.2%

38.8%

Question 16

Smeltzer uses the Direct Method to allocate support department costs. The Service Departments are HR and Custodial services. Production Departments are Fabrication and Assembly. Initial cost distributions to each department are as follows: HR = $240,000; Custodial = $620,000; Fabrication = $1,400,000 and Assembly = $890,000.

HR Custodial Fabrication Assembly

Square feet 600 1,000 5,000 3,000

People 8 15 30 20

Smeltzer uses # people as cost driver for HR and square footage for Custodial costs. What will be the total costs for the Assembly Department after all service department costs are allocated?

$1,218,500

$1,931,500

$1,750,020

Not this one.

Question 15

When support department costs are applied using the Multiple Production Department Method, all overhead is applied to products using a single cost driver at the same rate.

1. True
2. False

Question 14

Which of the following is not true of the sequential method to allocate support department costs?

The order in which support department costs are dealt with doesn't matter.

The sequential method is more complex than the direct method.

The sequential method to allocate support department costs is usually easier to use than the reciprocal services method, particularly when there are more than four departments involved.

Not this one.

Question 13

Wilson Brace makes back braces for old college professors. The following information is available:

Sales = $500,000; Fixed Costs = $162,000; Variable Costs = $150,000; Sales salaries = $87,000

Calculate the Operating Leverage for Wilson Brace.

1.86

2.66

2.16

Not a choice

Question 12

The Unit Contribution Margin = Unit Sales Price - Variable Cost per Unit

1. True
2. False

Question 11

Amalgamated Foil makes wrapers for Kit Kat Bars. The following information was available at year end:

Sales = $2,000,000; Operating Income = $1,100,000; Contribution Margin = $1,350,000.

What were the Fixed costs?

$650,000

$250,000

$900,000

Don't pick this one.

Question 10

Consider Mugyump Consolidated. If the unit cost of direct materials decreases, what will happen to the break-even point?

Break-even point will decrease.

Break-even point will increase.

Unit variable costs will increase.

The Dallas Cowboys will win the Super Bowl.

Question 9

Sundance uses the Direct Method to allocate support department costs to production departments. The company wants to allocate HR department costs. The most appropriate cost driver for this allocation would be

the number of employees in the production department

the square footage of the production department

the machine hours utilized by the plant

the amount of direct materials consumed by the production department

Question 8

Under the Sequential Method, support department costs are never allocated back to a support department whose costs have already been allocated.

1. True
2. False

Question 7

Shim Sham Rugs has calculated Break Even Sales to be 850 rugs. If next period, variable unit costs go up, the Break Even Sales number will fall.

1. True
2. False

Question 6

Sales in excess of the Variable costs of production is

The Contribution Margin

Variable Cost per Unit

Fixed Costs

Factory Overhead

Question 5

Costs that remain the same in total, even as production increases are called

fixed costs

variable costs

sunk costs

Bost costs

Question 4

Elementary, Inc makes left-handed candlestick holders at $4.44 fixed costs per unit. If Elementary doubles its production, what will happen to the fixed costs per unit, if nothing else changes?

the fixed costs per unit will decrease.

the fixed costs per unit will double.

the variable costs per unit will be cut in half.

the variable costs per unit will go up.

Question 3

The ______________ cost per unit does not change regardless of the activity level (volume of production).

variable

fixed

total

relevant

Question 2

The fixed cost per unit does not change even when activity (production) levels change.

1. True
2. False

Question 1

The activity levels over which a cost behavior is studied is called

Relevant Range

Remarkable Range

Activity Zone

Pertinent Period