Which of the following cost and cost allocation bases have a strong cause and effect relationship?
a. administration costs and cubic feet
b. setup costs and square feet
c. machine depreciation and output units
d. machine maintenance and setup hours
Machine depreciation and output units have a strong cause and effect relationship. |
The wear and tear on machine is dependent on output units and thus establishes a strong cause and effect relationship. |
Option C is correct |
Which of the following cost and cost allocation bases have a strong cause and effect relationship?...
Home Insert A Page Layout B С D G H Cause-and-Effect Relationship Between Allocation Base and Activity Cost Total Standard Job Special Job 400 200 $ 600 $ 750 $ 100 $ 125 $ 90 $ 100 10 10 $ 75,000 Indirect costs of operating printing machines increase with printing machine hours 7 1 2 Number of printing jobs 3 Price per job 4 Cost of supplies per job 5 Direct labor costs per job 6 Printing machine-hours per job...
in an activity cost pool : 1- the costs have a cause- and -effect relationship with the cost allocation base for that activity 2- each pool pertains to a narrow and focused set of costs 3- costs in a cost pool can always be traced directly to products 4- a measure of the activity performed serves as the cost allocation base 5-the cost pools are homogeneous over time
The most preferable allocation base is one that meets the criteria of: Fairness Cause and effect Correct! Benefits received Ability to bear Question 2 A company allocates its corporate overhead to the divisions based on division sales (i.e., a division with 20% of the total company sales is allocated 20% of the corporate overhead). This is an example of: Fairness Cause and effect Benefits received Ability to bear Correct! Question 3 A company allocates its human resources department...
Which of the following has the weakest linkage between activity and cost driver? A) B) C) D) E) Model Machine setup Machine maintenance Lighting on shop floor Quality control Materials Handling Cost Driver Number of setups Machine hours Number of kilowatt-hours Square feet of floor space Weight of materials in process
Which of the following is true of corporate-sustaining costs? A) are common to all individual customers B) have a clear cause-and-effect relationship with several cost-allocation bases C) should be allocated for decisions regarding reducing customer costs D) evaluates the effectiveness of sales personnel
For companies in which full allocation is not followed, which of the following is true of corporate sustaining costs? A) allocated to divisions using cause-and-effect relationship B) allocated to customers using cause-and-effect relationship C) added to aggregate operating incomes of the divisions D) subtracted as a lump-sum amount after aggregating operating incomes of the divisions In 2016, Smart Office Systems Inc. (SOSI) used 25,840 pounds of plastic (direct materials) to produce 8000 units as opposed to 2017 when SOSI produced...
1. Support Department Cost Allocation—Reciprocal Services Method Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $273,000. The total cost of the Cafeteria Department is $180,000. The number of employees and the square footage...
To guide cost allocation decisions, the cause-and-effect criterion ________. A) is used less frequently than the other criteria B) is the primary criterion used in activity-based costing C) considers fairness as a matter of judgment rather than an operational criterion D) advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it
Support department cost allocation—sequential method Crystal Scarves & Co. produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, respectively. Information about each department is provided in the following table: Department Total Cost Number of Employees Machine Hours Square Feet Maintenance Department $ 2,300 6 57 800 Security Department 3,000 4 0 600 Cutting...
Support department cost allocation—sequential method Crystal Scarves & Co. produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, respectively. Information about each department is provided in the following table: Department Total Cost Number of Employees Machine Hours Square Feet Maintenance Department $ 2,300 6 57 800 Security Department 3,000 4 0 600 Cutting...