38. A company has two production cost centres and two service cost centres. Production overheads have already been allocated and apportioned to the production cost centres with overheads of $400 000 for cost centre H and $200 000 for cost centre K. Now the service cost centre costs are to be re-apportioned to the production cost centres. The details are as follows: % overhead apportioned to production cost centre H % overhead apportioned to production cost centre K Allocated and apportioned overhead Service cost Service cost Centre P Centre Q 25% 60% 75% $100 000 40% $160 000 What is the total re-apportionment to production cost centre H? ABCD A $121 000 [ ] $145 000 [ ] 1] $345 000 $521 000 39 Which of the following statements are true? 1 Activity based costing (ABC) can only be applied to service industries. II. Many service applications involve high fixed costs and the higher the number of cost units produced, the higher the fixed costs per unit ABCD ] [ ] [ ] [ ] I only II only Both I and II Neither I nor II 40. A company is developing a new product which has required market research of $120 000. It is estimated that the product will provide revenue of $600 000 during the following year with variable costs of $300 000 and fixed costs of $200 000 Which of the following costs are not relevant to a decision as to whether to produce this product? ABCO I] [ ] C [ ] [ ] $120 000 $200 000 $300 000 $500 000
38. A company has two production cost centres and two service cost centres. Production overheads have already been allocated and apportioned to the production cost centres with overheads of $400 000 for cost centre H and $200 000 for cost centre K. Now the service cost centre costs are to be re-apportioned to the production cost centres. The details are as follows: % overhead apportioned to production cost centre H % overhead apportioned to production cost centre K Allocated and apportioned overhead Service cost Service cost Centre P Centre Q 25% 60% 75% $100 000 40% $160 000 What is the total re-apportionment to production cost centre H? ABCD A $121 000 [ ] $145 000 [ ] 1] $345 000 $521 000 39 Which of the following statements are true? 1 Activity based costing (ABC) can only be applied to service industries. II. Many service applications involve high fixed costs and the higher the number of cost units produced, the higher the fixed costs per unit ABCD ] [ ] [ ] [ ] I only II only Both I and II Neither I nor II 40. A company is developing a new product which has required market research of $120 000. It is estimated that the product will provide revenue of $600 000 during the following year with variable costs of $300 000 and fixed costs of $200 000 Which of the following costs are not relevant to a decision as to whether to produce this product? ABCO I] [ ] C [ ] [ ] $120 000 $200 000 $300 000 $500 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![38.
A company has two production cost centres and two service cost centres. Production
overheads have already been allocated and apportioned to the production cost centres with
overheads of $400.000 for cost centre H and $200 000 for cost centre K. Now the service cost
centre costs are to be re-apportioned to the production cost centres. The details are as
follows:
% overhead apportioned to production cost centre H
% overhead apportioned to production cost centre K
Allocated and apportioned overhead
Service cost
Service cost
Centre P
Centre Q
25%
75%
60%
40%
$100 000
$160 000
What is the total re-apportionment to production cost centre H?
ABCD
A ]
$121 000
[ ]
$145 000
[ ]
$345 000
]
$521 000
39 Which of the following statements are true?
Activity based costing (ABC) can only be applied to service industries.
II. Many service applications involve high fixed costs and the higher the number of cost
units produced, the higher the fixed costs per unit
AI only
Both I and II
B
[ ] II only
C
D
Neither I nor II
40. A company is developing a new product which has required market research of $120 000. It is
estimated that the product will provide revenue of $600 000 during the following year with
variable costs of $300 000 and fixed costs of $200 000.
Which of the following costs are not relevant to a decision as to whether to produce this
product?
A [] $120 000
B
$200 000
C [ ] $300 000
$500 000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5edf4cd9-ab9c-47d0-82b6-b8c19d3a7a4c%2F8e287b6e-d282-4162-8432-3f8a84482719%2F1lv9d4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:38.
A company has two production cost centres and two service cost centres. Production
overheads have already been allocated and apportioned to the production cost centres with
overheads of $400.000 for cost centre H and $200 000 for cost centre K. Now the service cost
centre costs are to be re-apportioned to the production cost centres. The details are as
follows:
% overhead apportioned to production cost centre H
% overhead apportioned to production cost centre K
Allocated and apportioned overhead
Service cost
Service cost
Centre P
Centre Q
25%
75%
60%
40%
$100 000
$160 000
What is the total re-apportionment to production cost centre H?
ABCD
A ]
$121 000
[ ]
$145 000
[ ]
$345 000
]
$521 000
39 Which of the following statements are true?
Activity based costing (ABC) can only be applied to service industries.
II. Many service applications involve high fixed costs and the higher the number of cost
units produced, the higher the fixed costs per unit
AI only
Both I and II
B
[ ] II only
C
D
Neither I nor II
40. A company is developing a new product which has required market research of $120 000. It is
estimated that the product will provide revenue of $600 000 during the following year with
variable costs of $300 000 and fixed costs of $200 000.
Which of the following costs are not relevant to a decision as to whether to produce this
product?
A [] $120 000
B
$200 000
C [ ] $300 000
$500 000
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