Fundementals Of Cost Accounting Seventh Edition-McGraw Hill- ACCT521 CH 11 QUESTIONS Week 5

Regarding service department allocations, user departments can be Blank______ departments. Multiple select question. marketing correct other service correct production correct other user Correct Answer  marketing  other service  production Methods to allocate service department costs are the direct Blank 1 Blank 1 direct , Correct Unavailable, reciprocal Blank 2 Blank 2 reciprocal , Correct Unavailable, and step Blank 3 Blank 3 step , Correct Unavailable methods. (Enter only one word per blank.) Correct Answer  Blank 1: direct  Blank 2: step  Blank 3: reciprocal The direct method allocates costs to the final user of a service, Blank______. Multiple choice question. including intermediate users after allocating to other service departments incorrect ignoring intermediate users Correct Answer ignoring intermediate users

Which of the following are true of the step method? Multiple select question. Service department costs are allocated directly to user departments, ignoring intermediate users. The order of allocation can impact the percentage of service costs ignored in the allocation process. correct Once an allocation is made from a service department, no further allocations are made back to that department. correct Allocations must be made first from the service department that has provided the smallest proportion of its total services to other service departments. Correct Answer  The order of allocation can impact the percentage of service costs ignored in the allocation process.  Once an allocation is made from a service department, no further allocations are made back to that department. All services provided by any service department including services provided to other service departments are recognized when using the reciprocal Blank 1 Blank 1 reciprocal , Correct Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: reciprocal Examples of service departments include Blank______. Multiple select question. production department human resources correct information systems correct Correct Answer

The cost allocation method that charges service costs to user departments without making allocations between or among service departments is called the direct Blank 1 Blank 1 direct , Correct Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: direct The method that allocates some service department costs to other service departments is called the direct Blank 1 Blank 1 direct , Incorrect Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: step Total Service Department Costs = Direct Costs of the Service Department + Cost Allocated to the Service Department is the equation form of the Blank______ method. Multiple choice question. mixed direct step reciprocal correct Correct Answer reciprocal The cost of a manufacturing process with two or more outputs is called a(n) joint Blank 1 Blank 1 joint , Correct Unavailable cost. (Enter only one word per blank.) Correct Answer  Blank 1: joint

Which of the following statements are correct? Multiple select question. Cost allocation is somewhat arbitrary, regardless of the method chosen. correct All three methods of cost allocation are still in use today. correct The step method of allocating service costs is always superior to the direct method. Reason: This may or may not be true. Correct Answer  Cost allocation is somewhat arbitrary, regardless of the method chosen.  All three methods of cost allocation are still in use today. Processing costs incurred prior to the split Blank 1 Blank 1 split , Correct Unavailable- off Blank 2 Blank 2 off , Correct Unavailable point Blank 3 Blank 3 point , Correct Unavailable are the joint costs. (Enter only one word per blank.) Correct Answer  Blank 1: split  Blank 2: off  Blank 3: point or points If there are no reciprocal services among the service departments, the cost savings from eliminating a particular department would generally include Blank______. Multiple select question. variable costs correct avoidable fixed costs incorrect unavoidable fixed costs

 The order of allocation can impact the percentage of service costs ignored in the allocation process.  Once an allocation is made from a service department, no further allocations are made back to that department. Major methods for allocating joint costs are Blank______ method. Multiple select question. gross realizable net realizable value correct physical quantities correct reciprocal Correct Answer  net realizable value  physical quantities The outputs from a common input and common production process are called joint Blank 1 Blank 1 joint , Correct Unavailable products Blank 2 Blank 2 products , Correct Unavailable. (Enter only one word per blank.) Correct Answer  Blank 1: joint  Blank 2: products or product Joint costs allocated based on the proportional values of the joint products at the split-off points is called the Blank______ method. Multiple choice question. net realizable value correct gross realizable value step physical quantities Correct Answer net realizable value

The stage of processing at which the two products are separated is called the split Blank 1 Blank 1 split , Correct Unavailable- off Blank 2 Blank 2 off , Correct Unavailable point Blank 3 Blank 3 point , Correct Unavailable. (Enter only one word per blank.) Correct Answer  Blank 1: split  Blank 2: off  Blank 3: point The method that allocates joint costs based on measurement of the volume or weight of the joint products at the split-off point is the physical Blank 1 Blank 1 physical , Correct Unavailable qualities Blank 2 Blank 2 qualities , Incorrect Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: physical  Blank 2: quantities or quantity Estimating the cost savings from eliminating a particular department is reasonably straightforward Blank______. Multiple choice question. whether or not service departments serve other service departments as long as service costs are allocated used the direct method when there are no reciprocal services correct Correct Answer when there are no reciprocal services Which of the following are limitations of allocating joint costs? Multiple select question.

The two major methods for allocating joint costs are the net realizable Blank 1 Blank 1 realizable , Correct Unavailable value Blank 2 Blank 2 value , Correct Unavailable method and the physical Blank 3 Blank 3 physical , Correct Unavailable quantities Blank 4 Blank 4 quantities , Correct Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: realizable  Blank 2: value  Blank 3: physical  Blank 4: quantities or quantity The outputs from joint production process that are relatively minor in quantity and/or value when compared to the main outputs are called by Blank 1 Blank 1 by , Correct Unavailable- products Blank 2 Blank 2 products , Correct Unavailable. (Enter only one word per blank.) Correct Answer  Blank 1: by  Blank 2: products or product Joint costs are allocated based on the proportional values of the joint products at the split-off point when using the s Blank 1 Blank 1 s , Incorrect Unavailable s Blank 2 Blank 2 s , Incorrect Unavailable s Blank 3 Blank 3 s , Incorrect Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: net  Blank 2: realizable  Blank 3: value

The physical quantities method is used when Blank______. Multiple select question. physical measures are not available for the products there is insignificant processing occurring between the split-off point and the first point of marketability output product prices are highly volatile correct significant processing occurs between the split-off point and the first point of marketability correct Correct Answer  output product prices are highly volatile  significant processing occurs between the split-off point and the first point of marketability Which of the following statements are correct? Multiple select question. It is impossible to separate joint costs attributable to products on a cause- and-effect basis. correct Because it is arbitrary, allocating joint costs is rarely done in practice. Reason: It is arbitrary, but often done in practice. No one allocation method is appropriate for all situations. correct Correct Answer  It is impossible to separate joint costs attributable to products on a cause-and-effect basis.  No one allocation method is appropriate for all situations. When considering a sell-or-process-further decision, management must consider Blank______. Multiple select question. additional revenue after processing further correct additional cost of processing further