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Cost Accounting 101 Practice Test: Allocation of Support-Department Costs, Common Costs, and Revenues Basics
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Support-department costs: Cost allocation is the process of assigning common resource costs to cost objects or common costs.  The three steps in allocating costs are: Trace all overhead costs to a support or producing department Allocate support-department costs to the producing departments Allocate overhead costs to units of individual products using a predetermined overhead rate Common costs: Common costs include rent, phone and utilities, licenses and tax deposits, professional services, insurance, travel expenses, office and other administrative supplies, and marketing... Show more
Cost Accounting 101 Practice Test: Allocation of Support-Department Costs, Common Costs, and Revenues Basics
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25 Questions

1. Complete reciprocated costs:
2. An advantage of the single-rate method is that it is easier and always the most accurate cost-allocation choice.
3. To give more weight to the product that most likely drives the sales of the bundled product, the revenue allocation should be weighted using:
4. Under the dual-rate cost-allocation method, when fixed costs are allocated based on actual usage then:
5. When budgeted cost-allocation rates are used, user-division managers face uncertainty about the allocation rates for that budget period.
6. Which of the following linear equations represents the complete reciprocated cost of the Data Processing Department?
7. Under the stand-alone method of allocating common costs:
8. All contracts with U.S. government agencies must comply with cost accounting standards issued by the:
9. The stand-alone method of allocating common costs emphasizes fairness and equity among users.
10. Allocating common costs is clear-cut and can best be achieved by using the stand-alone cost-allocation method.
11. The step-down allocation method:
12. Approaches used to rank products for revenue allocation might include:
13. The direct allocation method provides key information for outsourcing decisions regarding support services.
14. Which of the following departments is NOT a support department for a boat manufacturing company?
15. To discourage unnecessary use of a support department, management might:
16. When actual cost-allocations rates are used:
17. The stand-alone method may use selling price or unit costs to allocate revenues.
18. The method that allocates costs in each cost pool using the same rate per unit is known as the:
19. The reciprocal allocation method:
20. The incremental method of allocating common costs often creates the incentive to be the first-ranked user.
21. ________ occurs where revenues, related but NOT traceable to individual products, are assigned to those individual products.
22. The support department allocation method that is the most widely used because of its simplicity is the:
23. Under the incremental method of allocating common costs:
24. An example of a bundled product is when a computer software manufacturer charges a single price for the spreadsheet, word processing, and presentation software. on the same CD.
25. The costs of unused capacity are highlighted when:

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