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18. Which of the following cost allocation methods does not take into consideration that service centers provide services to each other? a. two-step method b. reciprocal method c. step method d. direct method

Why might a manager prefer that budgeted rather than actual cost-allocation rates be used for costs being allocated to his or her department from another department?

When allocating support department costs, managers must identify cost pools.  The choice of cost pools is:   Question 2 options:   not influenced by the allocation base.   not important, because all support department costs will eventually be allocated anyway.   influenced by the design of the accounting information system.   determined by whether a company uses IFRS or ASPE.

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What is a potential disadvantage of the reciprocal method? a. It is the most complex method of cost allocation. b. Both fixed and variable costs are allocated based on the computed cost base. c. It considers the support department cost as its own department cost. d. All the above.

1. In the context of allocating support department costs to production departments, which of the following methods is the easiest but the least accurate? a. Step-down method b. Reciprocal services method c. Sequential method d. Direct method 2. In the context of allocating support department costs to production departments, which of the following methods is the most difficult but the most accurate? a. Reciprocal services method b. Step-down method c. Direct method d. Sequential method considers all inter-support- 3. In the context of allocating support department costs to production departments, the department services and is the most difficult to implement when a large number of departments is involved.

Q3 Which of the following is a limitation of activity-based costing? Costs are accumulated by each major activity All costs in an activity cost pool pertain to a single activity Activity-based costing relies on the assumption that the cost in each cost pool is strictly proportional to its cost measure A variety of activity measures are used

which cost allocation method to use to serve better support direct cost to producing departments?

12.    Consider the following statements concerning ABC (activity-based costing) and ABM (activity-based management):          i.   ABM can be used with value chain analysis         ii.  ABC cannot be used in the service industries         iii. ABC is used in conjunction with ABM         iv. The ABC approach assumes that costs occur in proportion to production volume           Which of the above statements is (are) true?   Multiple Choice   a)i and ii   b)iii and iv   c)ii and iii   d)i and iii   e)i, iii and iv

Which of the following is a limitation of activity-based costing? More cost pools Poorer management decisions Less control over overhead costs Some arbitrary allocations continue