Question

12. Which of the following statements is (are) false? (I) The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method. (Il) One reason to allocate service department costs to user departments is to encourage the user departments to monitor their use of the service department costs. A. Only I is false. B. Only II is false. C. Both I and II are false. D. Neither I nor II is false. 13. In computing the current period's manufacturing cost per equivalent unit, the FIFO method of process costing considers: A. current period costs plus cost of beginning work-in-process inventory. B. current period costs less cost of beginning work-in-process inventory. C. only current period costs. D. current period costs plus the cost of ending work-in-process inventory. 14. The variable overhead price variance is due to: A. efficiency items only. B. both price and efficiency items. C. price items only D. neither price or efficiency items. 15. Which of the following statements is (are) false? (I) In the weighted-average approach, the number of physical units transferred out cannot be greater than the equivalent number of units produced during the period. (I) If the beginning Work-in-Process inventory is zero, first-in, first-out (FIFO) and weighted-average process costing will assign the same amount to the units transferred out. A. Only I is false. B. Only II is false C. Both I and II are false. D. Neither I nor II is false. A-5

Answer 1

Question No. - (12) - Answer -

Step - ( 1 ) - Facts of the Question given -

Which of the following statements is (are) false -

(I) - The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.

(II) - One reason to allocate service department costs to user departments is to encourage the user departments to monitor their use of the service department costs.

.

Step - ( 2 ) - Analysis -

(I) - The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method, this statement is False, because the selection process is same for both methods.

(II) - One reason to allocate service department costs to user departments is to encourage the user departments to monitor their use of the service department costs, this statement is True.

.

Step - ( 3 ) - Conclusion -

Hence, Option - ( A ) - Only I is false is Correct, because the selection process is same for both methods.