# 12 2 questions 1 variable costs of service departments are allocated to user departm 4308004

12.2   Questions

1) Variable costs of service departments are allocated to user departments using ________ cost rates instead of ________ cost rates.

A) actual; budgeted

B) budgeted; actual

C) long-range; short-range

D) short-range; long-range

2) Budgeted cost rates are used for allocating variable costs of service departments to user departments because ________.

A) it protects user departments from intervening price fluctuations

B) it protects user departments from inefficiencies in service departments

C) it protects managers in producing departments from uncontrollable costs

D) all of the above

3) The preferred guidelines for allocating service department costs to user departments include ________.

A) allocating variable-cost and fixed-cost pools separately

B) establishing details about cost allocation after providing services

C) using actual costs for allocation

D) none of the above

4) What formula should be used to allocate variable costs from service departments to user departments?

A) budgeted unit rate x total budgeted units planned to be used

B) actual unit rate x total budgeted units planned to be used

C) budgeted unit rate x actual units used

D) actual unit rate x actual units used

5) James Company has two production departments called Mixing and Finishing.  The maintenance department serves both production departments.  Budgeted fixed costs for the maintenance department are \$30,000.  Budgeted variable costs for the maintenance department are \$5.00 per labor hour.  Actual maintenance department costs are \$36,000 fixed and \$100,000 variable.  Other relevant data follow:

Mixing                  Finishing

Capacity available20,000 labor hours15,000 labor hours

Capacity used15,000 labor hours9,000 labor hours

The amount of variable maintenance department costs allocated to the Mixing Department should be ________.

A) \$48,000

B) \$62,500

C) \$75,000

D) \$100,000

6) Rodney Company has two production departments called Mixing and Finishing.  The maintenance department serves both production departments.  Budgeted fixed costs for the maintenance department are \$30,000.  Budgeted variable costs for the maintenance department are \$5.00 per labor hour.  Other relevant data follow:

Mixing                   Finishing

Capacity available20,000 labor hours15,000 labor hours

Capacity used15,000 labor hours9,000 labor hours

Actual maintenance department costs:

Fixed\$36,000

Variable\$100,000

The amount of variable maintenance department costs allocated to the Finishing Department should be ________.

A) \$37,500

B) \$42,000

C) \$45,000

D) \$75,000

7) The Technical Services Department of Michigan State University leased a photocopy machine for \$1,500 per month plus \$0.04 per copy.  Additional budgeted variable operating costs were \$0.02 per copy.  The Technical Services Department estimated the machine would produce 30,000 copies per month.  The Accounting Department estimated is would make 6,000 copies per month but actually made 5,000 copies.  Assume fixed and variable cost pools are allocated separately.  What is the amount of variable cost allocated to the Accounting Department for the month?

A) \$200

B) \$240

C) \$300

D) \$360

8) When allocating fixed costs from service departments to production departments, managers should use ________ instead of ________.

A) capacity used; capacity available

B) capacity available; budgeted capacity

C) capacity used; budgeted capacity

D) capacity available; capacity used

9) The Technical Services Department of Michigan State University leased a photocopy machine for \$2,000 per month plus \$0.04 per copy.  Additional budgeted variable operating costs were \$0.02 per copy.  The Technical Services Department estimated the machine would produce 30,000 copies per month.  The Accounting Department estimated is would make 6,000 copies per month but actually made 4,000 copies.  Assume fixed and variable cost pools are allocated separately.  What is the amount of fixed cost allocated to the Accounting Department for the month?

A) \$200

B) \$240

C) \$360

D) \$400

10) A reason for using capacity available instead of capacity used when allocating fixed costs from service departments to producing departments is ________.

A) actual usage by user departments does not affect short run allocations to other user departments

B) actual usage by user departments does not affect long run allocations to other user departments

C) the allocation methods to assign service department costs to producing departments are inaccurate

D) the allocation methods to assign service department costs to producing departments are not available

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