management accounting Online Assignment One

Review Assessment: Online Assignment One S2 2012

1. The service department cost allocation method that completely ignores reciprocal services between service departments is called the:
Answer
Selected Answer: direct method. 2. In order to have a high-quality finished product:
Answer
Selected Answer: the product's design specifications must meet customers' expectations AND the product must meet the standards of its design.

3. The ‘direct method' ignores the fact that:
Answer
Selected Answer: some service departments provide services to other service departments

4. Refer to the following data.
Direct material used $150 000
Selling costs $5 000
Indirect labour $7 000
Administrative costs $10 000
Depreciation on factory equipment $70 000
Direct labour $40 000
Overtime premiums paid $20 000
Indirect materials $45 000

The product costs are:
Answer
Selected Answer:
$332 000
5. The Casual Furniture Company manufactures outdoor furniture, and incurred the following costs during the month of January.
Timber $25 000
Paint $5 000
Glue $500
Wages—assembly personnel $20 000
Wages—factory supervisor $3 500
Factory cleaner's wages $2 000
Sales commissions $10 000
Administrative staff salaries $4 000
Depreciation—factory equipment $3 000
Depreciation—sales office equipment $1 000
Utilities, insurance—factory $6 000
Utilities, insurance—sales office $2 000
Advertising $8 000
Total costs $90 000

The manufacturing overhead is:
Correct Answer: $15 000

6. Cost of Goods Manufactured = Beginning Work in Process + Total Manufacturing Costs – Ending Work in Process.
Answer
Selected Answer: True

7. When recording inventory in the financial statements, the accounting standards prescribe that the companies use the lower of cost or net realisable value.
Answer
Selected Answer: True 8. The Lots More Store has a Janitorial Department and a Personnel Department that provide services to