Assignment
Question 1
Which of the following statements is (are) false regarding the direct method of allocating service department costs?
(A) The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.
(B) Once an allocation is made from a service department using the direct method, no further allocations are made back to that department.
Both A and B are false.
Neither A nor B is false
Only B is false.
Only A is false.
Question 2
Which of the following statements is (are) true regarding the master budget?
(A) A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c) tactical short-range profit plan.
(B) A master budget consists of a budgeted (a) income statement, (b) balance sheet, and (c) stockholder's equity statement.
Neither A nor B is true.
Both A and B are true.
Only B is true.
Only A is true.
Question 3
Relative performance evaluations (RPE) are not designed to
restate departmental goals so meaningful comparisons can be made.
remove the effect of environmental factors that are beyond a manager's control.
compare divisions with other comparable divisions.
compare managers to other comparable managers.
Question 4
Pardee Company makes 30% of its sales for cash and 70% on account. 60% of the account sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder is uncollectible. The following information has been gathered for Pardee's first year of operations:
Month 1 2 3 4
Total sales $60,000 $70,000 $50,000 $30,000
Total cash receipts in Month 3 will be
$51,510.
$50,000.
$53,290.
$52,200.
Question 5
Which of the following is a weakness of the step method of service cost allocations?
Computations are more complex than the reciprocal method.
The order of service department allocation has to be determined.
All intradepartmental services are ignored.
All interdepartmental services are ignored.
Some user departments are ignored.
Question 6
The controllability concept states that managers should be held responsible for
fixed compensation items, but not contingent compensation items
only items that are allocated to their divisions on a per-unit basis.
costs and revenues, but not investments in assets used in their division.
all items over which they have decision-making authority.
Question 7
In developing a master budget for a manufacturing company, which one of the following items should be done first?
preparation of a pro forma income statement.
determination of the advertising budget.
determination of manufacturing capacity.
development of the capital budget.
development of a sales budget.
Question 8
Which of the following budgets is not required in a service organization?
marketing and administrative expenses
cost of goods sold
labor
sales
cash
Question 9
Which of the following best describes the objective of joint cost allocation?
Making decisions about raw materials requirements.
Making decisions about levels of production.
Pricing goods for sale.
Inventory valuation.
Question 10
Beta Company is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows:
Customer A Customer B
Units purchased 100,000 200,000
Purchase orders (annual) 5 20
What is the amount of the sales support costs that should be allocated to Customer A assuming Beta uses activity-based costing (ABC)?
$9,600
$8,000
$4,000
$2,400