ACCT 434 Week 1 Quiz (Updated)

total direct costs are unchanged because they can be traced to the product in an economically feasible way and traced costs are more accurate.
the costs are grouped in homogeneous pools of the same or similar amounts.
the criterion of cause and effect is used to relate indirect costs to a factor that systematically links to a cost object.
the organization looks for cost-allocation bases that will provide a uniform spreading of indirect costs to each product.

Use of multiple cost-allocation bases
Use of indirect-cost rates for significant resource use
Use of the cause-and-effect criterion
Use of multiple cost pools

attention given to indirect cost allocation.
many necessary calculations.
operations staff’s attitude toward the accounting staff.
use it makes of technology.

misallocating direct labor costs.
overpricing the product.
undercosting another product.
understating total product costs.

all costs should be allocated to products.
costs should only be allocated when there is a strong cause-and-effect relationship.
only unit-level and batch-level costs should be allocated.
only unit-level costs should be allocated.

several complex products are manufactured.
only one product is manufactured.
direct labor costs are low.
factories produce a mix of products.

can be used to eliminate non-value-added activities.
is easy to analyze and interpret.
takes the choices and judgment challenges away from the managers.
emphasizes how managers can achieve higher sales.

analyze costs.
prepare budgets.
evaluate performance.
All of the above

activities relate to more than one level of the cost hierarchy.
product costs are significantly cross-subsidized.
the same allocation base is appropriate for all departmental activities.
it is a service department.

$2.50
$2.00
$3.00
$4.00