HW - Topic 4: Departmental Cost Allocation

The direct method of departmental cost allocation is the simplest of the three methods because it:

Multiple Choice

• Ignores the reciprocal flows.

  Correct

• Uses the service flows only to service departments.

• Uses a sequence of steps to allocate service department costs.

• Doesn’t require any calculations.

• All of these answer choices are correct.

Ignores the reciprocal flows.

• $102,222.

• $122,402.

• $127,778.

• $142,471.

• $150,050.

• $127,778.

Multiple Choice

• $100,000.

• $109,000.

• $126,000.

• $130,000.

• $135,000.

• $130,000.

The departmental approach of cost allocation recognizes that the typical manufacturing operation involves which type(s) of departments?

Multiple Choice

• Service departments and production departments.

  Correct

• Production departments and assembly departments.

• Joint product departments and separable departments.

• Cost pools and cost objects.

• Support departments and other service departments.

Service departments and production departments.

The mathematical technique that underlies the reciprocal cost allocation method is:

Multiple Choice

• Regression analysis.

• Simultaneous equations.

  Correct

• Analysis of variances.

• Complex algebraic functions.

• Multiple correlation.

Simultaneous equations.

Multiple Choice

• $1,287,500.

• $2,170,000.

• $882,500.

  $842,500.

• $889,166.

• $882,500.