Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 7E
What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments?
- a. Building maintenance
- b. Inspection and packing
- c. Machine repair
- d. Human resources
- e. Purchasing
- f. Shipping
- g. Raw materials storeroom
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For each of the following support departments, identify a cost driver that could be used for allocating the support department costs to the profit center:a. Legalb. Duplication servicesc. Electronic data processingd. Central purchasinge. Telecommunicationsf. Accounts receivable
Cost Drivers for Support Department Allocations
For each of the following support departments, select the cost driver listed that is most appropriate for allocating support department costs to responsible units. Your answer should include the number of the cost driver only.
Cost drivers to choose from:
Number of conference attendees
Number of computers
Number of employees trained
Number of cell phone minutes used
Number of purchase requisitions
Number of sales invoices
Number of payroll checks
Number of travel claims
Support Department
Cost Driver
a. Accounts Receivable
b. Central Purchasing
c. Computer Support
d. Conferences
e. Employee Travel
f. Payroll Accounting
g. Telecommunications
h. Training
Which one of the following costs can be accurately
identified as forming part of a cost centre?
Select one:
A. Primary material
B. Salary of the factory supervisor
C. Indirect material
D. Maintenance material
Chapter 4 Solutions
Principles of Cost Accounting
Ch. 4 - What are factory overhead expenses, and what...Ch. 4 - What are three categories of factory overhead...Ch. 4 - What are the distinguishing characteristics of...Ch. 4 - When a products cost is composed of fixed and...Ch. 4 - What effect does a change in volume have on total...Ch. 4 - Distinguish between a step-variable cost and a...Ch. 4 - What is the basic premise underlying the high-low...Ch. 4 - What are the advantages and disadvantages of the...Ch. 4 - Differentiate between an independent variable and...Ch. 4 - Prob. 10Q
Ch. 4 - What is a flexible budget, and how can management...Ch. 4 - How does accounting for factory overhead differ in...Ch. 4 - What is the function and use of each of the two...Ch. 4 - What are two types of departments found in a...Ch. 4 - What are the two most frequently used methods of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - Is it possible to close the total factory overhead...Ch. 4 - What are the shortcomings of waiting until the...Ch. 4 - What are the two types of budget data needed to...Ch. 4 - Prob. 21QCh. 4 - What factory operating conditions and data are...Ch. 4 - Prob. 23QCh. 4 - How does activity-based costing differ from...Ch. 4 - What steps must a company take to successfully...Ch. 4 - What is the relationship between activity-based...Ch. 4 - Prob. 27QCh. 4 - Prob. 28QCh. 4 - If the factory overhead control account has a...Ch. 4 - Prob. 30QCh. 4 - Classify each of the following items of factory...Ch. 4 - Ames Automotive Company has accumulated the...Ch. 4 - Prob. 3ECh. 4 - Using the data in E4-2 and spreadsheet software,...Ch. 4 - El Paso Products Company has accumulated the...Ch. 4 - Computing unit costs at different levels of...Ch. 4 - Identifying basis for distribution of service...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - Compute the total job cost for each of the...Ch. 4 - Classify each of the following items of factory...Ch. 4 - Job 25AX required 5,000 for direct materials,...Ch. 4 - Job 19AB required 10,000 for direct materials,...Ch. 4 - Match each of the following cost pools with the...Ch. 4 - The books of Petry Products Co. revealed that the...Ch. 4 - The general ledger of Lawson Lumber Co. contains...Ch. 4 - Nelson Fabrication Inc. had a remaining credit...Ch. 4 - Housley Paints Co. had a remaining debit balance...Ch. 4 - The cost behavior patterns below are lettered A...Ch. 4 - Miller Minerals Co. manufactures a product that...Ch. 4 - Scattergraph method Using the data in P4-2 and a...Ch. 4 - Using the data in P4-2 and Microsoft Excel: 1....Ch. 4 - Listed below are the budgeted factory overhead...Ch. 4 - Menlo Materials is divided into five departments,...Ch. 4 - Distribution of service department costs to...Ch. 4 - Journalizing the distribution of service...Ch. 4 - Channel Products Inc. uses the job order cost...Ch. 4 - Determining job costcalculation of predetermined...Ch. 4 - Focus Fabrication Co. uses ABC. The factory...Ch. 4 - Mansfield Manufacturing Co. uses ABC. The factory...Ch. 4 - Hughes Products Inc. uses a job order cost system....Ch. 4 - Abbey Products Company is studying the results of...Ch. 4 - The following information, taken from the books of...Ch. 4 - Rockford Company has four departmental accounts:...Ch. 4 - Luna Manufacturing Inc. completed Job 2525 on May...Ch. 4 - Phillips Products, Inc. had a remaining credit...Ch. 4 - Nathan Industries had a remaining debit balance of...Ch. 4 - Chrome Solutions Company manufactures special...Ch. 4 - Activity-based Costing
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- The actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.arrow_forwardFor each cost pool, identify an appropriate cost driver. A. order department B. accounts receivable processing C. catering D. raw material inventoryarrow_forwardWhat is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the productsarrow_forward
- What are the two most frequently used methods of distributing service department costs to production departments?arrow_forwardThe second stage of customer-based activity-based costing entails the assignment of: a. resource costs to sales departments. b. resources costs to distribution channels. c. customer-related activity costs to products. d. customer-related activity costs to customers.arrow_forwardClassify the following cost drivers as structural, executional, or operational. a. Number of plants b. Number of moves c. Degree of employee involvement d. Capacity utilization e. Number of product lines f. Number of distribution channels g. Engineering hours h. Direct labor hours i. Scope j. Product configuration k. Quality management approach l. Number of receiving orders m. Number of defective units n. Employee experience o. Types of process technologies p. Number of purchase orders q. Type and efficiency of layout r. Scale s. Number of functional departments t. Number of planning meetingsarrow_forward
- When allocating service department costs to production departments, why is the standard cost that the service department was expected to incur, rather than the actual cost that was incurred, used in the allocation?arrow_forwardClassify the following costs as typically direct (D) or indirect (I): Project staff Audit and legal Utilities Rent Raw materials Training on equipment Project supplies Labor Administrative staff Miscellaneous office supplies Quality assurance IT department Scheduled maintenance Shared software packagesarrow_forwardWhat is the total amount of service cost that should be allocated to the Printing department under the direct and step method?arrow_forward
- 1. Activity Levels Determine the appropriate level for each of the following activities or costs. Indicate whether the activity is unit-level (UL), batch-level (BL), product-level (PL), facility-level (FL): A) Equipment setups B) Plant supervision C) Prime costs D) Packaging and shipments E) Designing, changing and advertising F) Heating, lighting G) Research and development H) Product order processingarrow_forward2 Which of the following is least likely to be classified as a facility level activity in an activity-based costing system? a. Plant management salaries b. Property taxes c. Machine processing cost d. Pant maintenance e. Plant depreciationarrow_forwardWhich of the following would be a service department for a furniture manufacturer? A. Assembly Department B. Quality Control Department C. Cutting Department D. Finishing Departmentarrow_forward
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