Question: 1 The direct method of allocating service department costs__________.

Question

Question: 1

The direct method of allocating service department costs__________.

A) allocates some of a service department's costs to other service departments.

B) is the most precise method of allocating costs.

C) allocates service department costs to production (operating) departments but not to other service departments

D) Is also known as the incremental method.

Choose the correct answer:

Question: 3

Assume Division A makes a part that could be used by Division B. Division A has a capacity of 30,000 parts. They are currently selling 20,000 parts to outside customers. Divsion B needs 10,000 parts. The highest acceptable transfer price (per part) for Division B would be:

Choose the correct answer:

A) Variable cost of producing one part

B) Full absorption cost of producing one part.

C) The selling price to outside customers.

D) The lowest price charged by competitors of Division A

Question: 4

Xavier Company allocates IT costs on the basis of computer hours. Computer hours in Xavier's departments are:

IT (Service) 6,000

Admin (Service) 18,000

Sales (Service) 8,000

Prodution Dept 1 14,000

Production Dept 2 6,000

Under the direct method, what percentage of the IT costs should be allocated to Production Dept 1?

(Enter as a percentage with % sign. For example, 24%.)

Question: 5

A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January. If the net realizable value method of accounting for by-products is used, the gross profit for the month would equal __________.

(Use commas. No $ signs. No decimals.)

Question: 6

A company has sales of $40,000 and COGS of $21,000 on their primary product during January. A by-product, with a net sales value of $800, is produced during January as well. Sales of the by-product totaled $400 in revenue for January. If the manufacturing cost recovery method of accounting for by-products is used, the gross profit for the month would equal __________.

In your answer

(Use commas. No $ signs. No decimals.)

Please can I have your help......thank you

A) allocates some of a service department's costs to other service departments.

B) is the most precise method of allocating costs.

C) allocates service department costs to production (operating) departments but not to other service departments

D) Is also known as the incremental method.

Explanation / Answer

1) allocates some of service department costs to other service departments

3) variable cost of producing one part

4) 13.04%

5) Gross Profit $ 19800

6) Gross Profit $ 19400

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