5) Indirect expenses are those expenses that:

A) may be incurred outside the control of a department manager.

B) cannot be identified with a specific department.

C) are incurred for the general benefit of a company.

D) All of these answers are correct.

6) Which of the following would be a direct expense?

A) Depreciation expense

B) Sales salaries

C) Building expense

D) Administrative expense

 

7) Which of the following would not be considered a direct expense?

A) Building expenses

B) Advertising expense

C) Administrative expense

D) All of the above

 

8) Which of the following would be a direct expense of a sales department?

A) Sales salaries

B) Office salaries

C) Advertising expense

D) Sales salaries and Advertising expense

 

9) Administrative expenses are:

A) indirect expenses.

B) direct expenses.

C) not broken down by department.

D) All of these answers are correct.

10) Which of the following statements is incorrect?

A) Building expense is an indirect expense.

B) Indirect expenses cannot be assigned to different departments based on an allocation such as square feet.

C) If an expense is traceable to a particular department, it is a direct expense.

D) Advertising expense can be both a direct and an indirect expense.

 

11) If the cosmetic department in the store measures 10,000 square feet and the total building cost is $30,000 for a 40,000 square foot building, the cost that would be allocated to the cosmetic department would be:

A) $30,000.

B) $10,000.

C) $22,500.

D) $7,500.

 

12) If the music department in a department store is 8,000 square feet and the total square feet is 40,000, how much of the total building cost of $40,000 will be allocated to music?

A) $8,000

B) $1,000

C) $32,000

D) $10,000

 

13) Advertising totaled $10,000; $3,000 was indirect. What would be the best choice to use to allocate the indirect cost?

A) Allocate the indirect expense based on square feet.

B) Allocate the indirect expense based on gross sales.

C) Charge indirect expense to administrative expense.

D) Allocate the indirect expense based on goods shipped.

14) If delivery expense is not traceable to a department, it would be considered a(n):

A) direct expense.

B) indirect expense.

C) profit center issue.

D) cost center issue.

 

 

 



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