management accounting Online Assignment One

Topics: Costs, Cost accounting, Variable cost Pages: 8 (1329 words) Published: April 27, 2014
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:
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:
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:
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
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 three Sales Departments. The Janitorial Department cost is allocated based on space and the Personnel Department cost is allocated based on employees. The following information is available.

Budget$45 000$30 000
Space (sq m)4 0001 00020 00030 00050 000
No. of Employees510154530

Using the step-down method, calculate the amount of Janitorial Department cost allocated to Sales Department #2, if the Personnel Department is allocated first. Answer
Selected Answer:
$10 350
9.Quality of conformance refers to:
Selected Answer:
the degree to which the product meets its design specifications. 10.Which of the following is not an objective of management accounting? Answer
Selected Answer:
Providing information for profit and loss statements
11.Appraisal costs refer to costs incurred:
Correct Answer: in determining whether defects exist.

12.Leisure Life manufactures a variety of sporting equipment. The firm's predetermined overhead application rate was 150 per cent of direct labour cost. Job 101 included direct materials of $15 000 and direct labour of $6 000. The manufacturing overhead applied to Job 101 during the year was: Answer

Selected Answer:
$9 000
13.Which of the following is not a cost of quality?
Selected Answer:
Productive inefficiency cost

14.If production increases, variable cost will: Correct Answer: remain constant on a per unit basis.

15.The service department cost allocation method that fully accounts for the mutual provision of services between service departments is called the: Answer
Selected Answer:
reciprocal method.
16.Which of the following statements is correct?
Selected Answer:
Cost accounting is a subset of management accounting.

17.Richardson & Sons purchased direct material worth $15 000 during the most recent period. At the end of the period the direct...
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