ACCT 346 Midterm Exam 2

7. Question : (TCO 6) Costs may be allocated to
Student Answer:
products.
services.
departments.
any of the above.
8. Question : (TCO 5) An allocation base
Student Answer:
is the minimum amount to be allocated to a cost object.
coordinates the manufacturing overhead costs as they are incurred.
will always be less than the variable costs for a product.
relates the cost pool to the cost objectives.
9. Question : (TCO 6) The building maintenance department for Jones Manufacturing
Company budgets annual costs of $4,200,000 based on the expected operating level for the coming
year. The costs are allocated to two production departments. The following data relate to the potential
allocation bases:
Production Dept. 1 Production Dept. 2
Square footage 15,000 45,000
Direct labor hours 25,000 50,000
If Jones assigns costs to departments based on square footage, how much total costs will be allocated to
Production Department 1?
Student Answer: $1,400,000
$1,050,000
$1,575,000
$2,100,000
10. Question : (TCO 7) A company is trying to decide whether to sell partially completed goods
in their current state or incur additional costs to finish the goods and sell them as complete units. Which
of the following is not relevant to the decision?
Student Answer:
The selling price of the completed units.
The costs incurred to process the units to this point.
The selling price of the partially completed units.
The costs that will be incurred to finish the units.
11. Question : (TCO 7) BigByte Company has 12 obsolete computers that are carried in
inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold
for $15,300. Alternatively, the computers could be sold “as is” for $9,000. What is the net advantage or
disadvantage of reworking the computers?
Student Answer:
$6,300 advantage
$1,200 disadvantage