91) What is the cost per driver unit for the correspondence activity?

A) $40.00

B) $0.07

C) $3.75

D) $12.50

92) How much of the account inquiry cost will be assigned to Department A?

A) $40,000

B) $200,000

C) $80,000

D) None of the above

93) How much of the account billing cost will be assigned to Department B?

A) $14,000

B) $140,000

C) $7,000

D) None of the above

94) How much of the correspondence cost will be assigned to Department B?

A) $5,000

B) $8,000

C) $25,000

D) None of the above

Allen Crabb Corporation had the following activities, traceable costs, and physical flow of driver units:

Activities

Traceable

Costs

Physical Flow of

Driver Units

Account inquiry (hours)

$400,000 

5,000 hours

Account billing (lines)

280,000 

2,000,000 lines

Account verification (accounts)

150,000 

20,000 accounts

Correspondence (letters)

50,000 

2,000 letters

The above activities are used by departments X and Y as follows:

X

Y

Account inquiry (hours)

500 hours 

800 hours

Account billing (lines)

250,000 lines 

200,000 lines

Account verification (accounts)

2,000 accounts

1,000 accounts

Correspondence (letters)

200 letters 

1,000 letters 

95) How much of the correspondence cost will be assigned to Department X?

A) $5,000

B) $50,000

C) $25,000

D) None of the above

96) How much of the account inquiry cost will be assigned to Department Y?

A) $400,000

B) $40,000

C) $64,000

D) $104,000

97) How much of the account verification cost will be assigned to Department Y?

A) $150,000

B) $7,500

C) $15,000

D) $22,500

98) A cost-management system

A) first measures the resources used by each department.

B) assesses the effects of changes in costs on the departments.

C) identifies how management’s decisions affect costs.

D) distinguishes between product costs and period costs.

Use the following information to answer item(s) below.

Meesen Inc. operates two support departments (A and B) and two producing departments (C and D).  Budgeted costs and normal activity levels are given below.

Support DepartmentsProducing Departments

A

B

C

D

Overhead costs

$120,000

$160,000

$300,000

$240,000

Number of employees

8

12

40

60

Maintenance hours

3,000

400

8,000

2,000

Machine hours

12,000

1,500

Labour hours

1,800

15,000

The costs of Department A are allocated on the basis of number of employees, and the costs of Department B are allocated on the basis of maintenance hours.

99) If the direct method is used, Department A costs allocated to Department C would be

A) $48,000.

B) $96,000.

C) $72,000.

D) $120,000.

100) If the direct method is used, Department B costs allocated to Department C would be

A) $192,000.

B) $160,000.

C) $128,000.

D) $180,000.



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