Problem 1: Which is TRUE about services?
a. Services can never be homogeneous and repetitively produced.
b. Some services may require that a sequence of uniform processes be performed.
c. Services cannot have work-in-process inventories.
d. All services require job-order costing.
Problem 2: Bill Berry, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the month of August are as follows:
Direct materials $ 100
CPA staff salaries 2,000
Overhead 900
Total $3,000
Number of tax returns 200
What is the unit cost per tax return?
a. $0.50
b. $10.00
c. $4.50
d. $15.00
Problem 3: Which of the following would be the most appropriate base for allocating the costs of the housekeeping department?
a. machine hours
b. direct labor hours
c. number of employees
d. square feet
Problem 4: Which of the following is NOT a major objective of allocation as identified by the IMA?
a. to value inventory
b. to obtain a mutually agreeable price
c. to compute product-line profitability
d. to detect fraud
Problem 5: The major objective(s) of allocations are
a. to motivate managers.
b. to compute product line profitability.
c. to value inventory.
d. all of the above.