A company produces and sells two types of products. It classifies its costs as belonging to four functions - production, marketing, distribution, and customer services. For purposes of setting selling prices for the products, all company costs are assigned to the two products. The direct costs of the four functions are traced directly to the two products. The indirect costs, on the other hand, are accumulated into four separate cost pools and then assigned to the two products using appropriate allocation bases. 31. The allocation base that would most likely be the best for allocating the Indirect costs of the marketing function is a. number of shipments. b. number of sales persons. c. number of customer phone calls. d. direct labor hours. 32. The allocation base that would most likely be the best for allocating the indirect costs of the distribution function is a. number of shipments. b. number of sales persons. c. direct labor hours. d. machine hours. 33. The allocation base that would most likely be the best for allocating the indirect costs of the customer services function is a. number of shipments. b. number of sales persons. c. number of customer phone calls. d. number of units produced. 34. It is a comprehensive understanding of how an organization generates its output. It involves the determination of which activities are value-adding or non-value-adding and how the latter may be reduced or eliminated. It is a key component of ABC Management that links product costing and continuous improvement. a. ABC system b. Process value analysis c. Backflush costing d. JIT system
A company produces and sells two types of products. It classifies its costs as belonging to four functions - production, marketing, distribution, and customer services. For purposes of setting selling prices for the products, all company costs are assigned to the two products. The direct costs of the four functions are traced directly to the two products. The indirect costs, on the other hand, are accumulated into four separate cost pools and then assigned to the two products using appropriate allocation bases. 31. The allocation base that would most likely be the best for allocating the Indirect costs of the marketing function is a. number of shipments. b. number of sales persons. c. number of customer phone calls. d. direct labor hours. 32. The allocation base that would most likely be the best for allocating the indirect costs of the distribution function is a. number of shipments. b. number of sales persons. c. direct labor hours. d. machine hours. 33. The allocation base that would most likely be the best for allocating the indirect costs of the customer services function is a. number of shipments. b. number of sales persons. c. number of customer phone calls. d. number of units produced. 34. It is a comprehensive understanding of how an organization generates its output. It involves the determination of which activities are value-adding or non-value-adding and how the latter may be reduced or eliminated. It is a key component of ABC Management that links product costing and continuous improvement. a. ABC system b. Process value analysis c. Backflush costing d. JIT system
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:ITEMS 31 to 34 ARE BASED ON THE FOLLOWING INFORMATION:
A company produces and sells two types of products. It classifies its costs as belonging to four functions - production,
marketing, distribution, and customer services. For purposes of setting selling prices for the products, all company
costs are assigned to the two products. The direct costs of the four functions are traced directly to the two products.
The indirect costs, on the other hand, are accumulated into four separate cost pools and then assigned to the two
products using appropriate allocation bases.
31. The allocation base that would most likely be the best for allocating the Indirect costs of the marketing
function is
a. number of shipments.
b. number of sales persons.
c. number of customer phone calls.
d. direct labor hours.
32. The allocation base that would most likely be the best for allocating the indirect costs of the distribution
function is
a. number of shipments.
b. number of sales persons.
c. direct labor hours.
d. machine hours.
33. The allocation base that would most likely be the best for allocating the indirect costs of the customer services
function is
a. number of shipments.
b. number of sales persons.
c. number of customer phone calls.
d. number of units produced.
34. It is a comprehensive understanding of how an organization generates its output. It involves the determination of
which activities are value-adding or non-value-adding and how the latter may be reduced or eliminated. It is a key
component of ABC Management that links product costing and continuous improvement.
a. ABC system
b. Process value analysis
c. Backflush costing
d. JIT system
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