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7) The step-down allocation method: A) typically begins with the support department that provides the highest percentage of its total services to other support departments B) recognizes the total amount of services that support departments provide to each other C) allocates complete reciprocated costs D) offers key input for outsourcing decisions 8) The reciprocal allocation method: A) is the most widely used because of its simplicity B) requires the ranking of support departments in the order that the allocation is to proceed C) is conceptually the most precise D) results in allocating more support costs to operating departments than actually […]

23) Power Company has been unhappy with the financial accounting variances that its cost accounting system has been producing, because its managers believe that there is more to evaluating an operation than just examining accounting numbers. Therefore, it has started gathering data to assist in the examination of nonfinancial results of operations. The following information relates to the manufacture of remote control units for televisions, radios, and stereo components: 20112012 Remote control units produced and sold80,000100,000 Direct manufacture labor-hours12,00013,200 Direct materials used (sets)80,600100,500 Direct manufacture cost per hour$18$20 Direct materials cost per set$31$32 Required: a.What is the partial productivity of […]

9.1   Identify the factors important to choosing the denominator level used to calculate fixed overhead allocation rates.   1) Using either the theoretical capacity or practical capacity as the denominator-level concept will result in the same production-volume variance.   2) Determining the “right” level of capacity is one of the most strategic and difficult decisions managers face.   3) Both theoretical and practical capacity measure capacity in terms of demand for the output.   4) Normal capacity utilization is the expected level of capacity utilization for the current budget period, which is typically one year.   5) Normal capacity utilization […]

  75) Alliance Realty bought a 2,000 acre island for $10,000,000 and divided it into 200 equal size lots. As the lots are sold they are cleared at an average cost of $5,000. Storm drains and driveways are installed at an average cost of $8,000 per site. Sales commissions are 10 percent of selling price. Administrative costs are $850,000 per year. The average selling price was $160,000 per lot during the year when 50 lots were sold. During the subsequent year, the company bought another 2,000 acre island and developed it exactly the same way. Lot sales in the second […]

  11) General Insurance Company had a static budgeted operating income of $4.6 million; however, actual income was $3.0 million. What is the static budget variance of operating income? A) $1,000,000 favourable B) $1,000,000 unfavourable C) $1,600,000 favourable D) $3,000,000 favourable E) $1,600,000 unfavourable   Use the information below to answer the following question(s).   Ames Golf Company used the following data to evaluate their current operating system. The company sells 1 pack of golf balls for $10 per pack. The $10 selling price is also the budgeted selling price.     Budgeted Actual Units Sold 1,000,000 990,000 Variable Costs […]