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Exam 12: Cost Accumulation, Tracing, and Allocation

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Question 31

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Bank's Department Store has three departments: Men's, Women's and Children's. The store incurred $50,000 of store rental costs during the current year. The departments identified the following cost drivers: Using the most appropriate cost driver, how much rental cost should be allocated to the Women's Department? (Do not round intermediate calculations. Round your answer to the nearest dollar.)

A) $33,333
B) $29,412
C) $25,081
D) $34,884

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Question 32

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Sheddon Industries produces two products. The products' identified costs are as follows: The company's overhead costs of $108,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product B? (Do not round your intermediate calculations.)

A) $7.80
B) $22.20
C) $16.80
D) None of the answers are correct.

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Question 33

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Indicate whether each of the following statements is true or false.

Danforth Manufacturing Company uses a cost-plus pricing strategy. At the beginning of the year, Danforth estimated that total annual fixed overhead costs would amount to $60,000. Further, Danforth estimated that the annual volume of production would be 1,000 units of product. Based on these estimates, Danforth computed a predetermined overhead rate that was used to allocate overhead cost to the products made throughout the year. As predicted, the actual volume of production amounted to 1,000 units of product. However, actual fixed overhead costs amounted to $56,000. Based on this information alone:

Cost objects may be:

Indicate whether each of the following statements is true or false.

Overhead costs include:

A cost object is anything for which management desires a separate tracking of costs, while a cost driver is the factor that causes the cost object to increase or decrease.

Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store?

Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following is an indirect cost, assuming the cost object is the Clock Department?

Allegheny Community College operates four departments. The square footage used by each department is shown below. Allegheny's annual building rental cost is $320,000 What amount of rent expense that should be allocated to the Sciences Department?

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,000,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: The amount of track improvement cost that should be allocated to the Western Division is: (Do not round intermediate calculations.)

Cobalt Company management has identified the following cost objects: Cost Object 1: The cost of operating the finishing department Cost Object 2: The cost of operating the factory Cost Object 3: The cost of a particular product made in June With respect to these cost objectives, how would rent paid by the finishing department for storage space be classified?

Cost accumulation is used to:

Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:

Blanton Company wishes to allocate rent expense of $24,000 to its three operating departments, A, B, and C. Assuming the three departments occupy 10,000, 20,000 and 30,000 square feet respectively, the cost allocation rate for Department C is $0.80 per square foot.

The process of dividing a total cost into parts and assigning it to cost objects is known as:

Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

Indicate whether each of the following statements is true or false.

Which of the following is not a step in allocating indirect costs to cost objects?