6. Costs allocation of service departments can be challenging because... I. The definition of support and operating departments can differ from one corporation to another. II. The service department can be located at a different organisational level in each согporation. III. The service departments can provide support to each other. IV. Unlike the operating departments, the cost of service departments is difficult to measure. a. I and III b. I, Ш, and IV с. I, П and IШ d. All the above

6. Costs allocation of service departments can be challenging because... I. The definition of support and operating departments can differ from one corporation to another. II. The service department can be located at a different organisational level in each согporation. III. The service departments can provide support to each other. IV. Unlike the operating departments, the cost of service departments is difficult to measure. a. I and III b. I, Ш, and IV с. I, П and IШ d. All the above

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 1SEQ: When the manager has the responsibility and authority to make decisions that affect Costs and...

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Similar questions

When the manager has the responsibility and authority to make decisions that affect Costs and revenues but no responsibility for or authority over assets invested in the department, the department is called: A. A cost center B. A profit center C. An investment center D. A service department
In each blank next to the following terms, place the identifying letter of its best description. 1. Cost center 2. Profit center 3. Responsibility accounting system 4. Service department 5. Indirect expenses 6. Controllable costs A. Incurs costs without directly yielding revenues. B. Provides information used to evaluate the performance of a department. C. Does not directly manufacture products but contributes to profitability of the entire company. D. Costs incurred for the joint benefit of more than one department. E. Costs that a manager has the ability to affect. F. Incurs costs and also generates revenues.
A company has several service departments that provide differing amounts of service to each other and to the company's operating departments. Which of the following statements is true? a. The direct method and the step method will result in the same amount of cost being allocated to each operating department. b. The direct method will result in the same amount of cost being allocated to each operating department regardless of which service department is allocated first. c. The step method will result in the same amount of cost being allocated to each operating department regardless of which service department is allocated first. d. All of the above are true.
Indirect costs occur when? A. Resources are shared by more than one product or service. B. Costs cannot be directly traced to products or services. C. Multiple departments share a piece of equipment or facility. D. All of the above are correct.
What are the differences between single and dual rate allocation? Explain with suitable examples. b) Provide a numerical example for single rate allocation and dual rate allocation and explain the process of allocating support department costs to the operating department, assuming that: The company has two support departments “S1 & S2” and two operating departments “O1 & O2.” The company use the direct method to allocate support department costs. Note: You are required to provide numerical examples assuming the values of your own and they should not be copied from any sources.
(Ch 8) Which departments in an organization produce services for external customers? Question 1 options: Support departments. Dual-rate departments. Operating departments. Sales departments. (Ch 8) When allocating support department costs, managers must identify cost pools. The choice of cost pools is: Question 2 options: not influenced by the allocation base. not important, because all support department costs will eventually be allocated anyway. influenced by the design of the accounting information system. determined by whether a company uses IFRS or ASPE.
1. Differentiate between a profit center and an investment center. 2. Weyerhaeuser developed a system that assigns service department expenses to user divisions on the basis of actual services consumed by the division. Here are a number of Weyerhaeuser's activities in its central Financial Services Department: Payroll Accounts payable Accounts receivable Database administration—report preparation For each activity, identify an activity base that could be used to charge user divisions for service. What is the major shortcoming of using income from operations as a performance measure for investment centers? In a decentralized company in which the divisions are organized as investment centers, how could a division be considered the least profitable even though it earned the largest amount of income from operations? How does using the return on investment facilitate comparability between divisions of decentralized companies? Why would a firm use a balanced scorecard in…
What of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting process. b.It aids management in cost cutting and/or cost control and inferentially in product profitability. c.It causes managers to identify non-value added activities and therefore encourages thinking of means of reducing such activities. d.Is more complex than traditional accounting system because it uses multiple cost application rates, one for each activity or cost pool.
The costs referred to as “controllable costs” are a. Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b. Costs which are likely to respond to the amount of attention devoted to them by a specified manager. c. Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity. d. Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.
When allocating support department costs, managers must identify cost pools. The choice of cost pools is: Question 2 options: not influenced by the allocation base. not important, because all support department costs will eventually be allocated anyway. influenced by the design of the accounting information system. determined by whether a company uses IFRS or ASPE.
Differential costs represent – Group of answer choices the costs which is shown in the balance sheet but not expensed in the income statement until the sale of the products. The differences in costs among different departments of an organization. the amount of increase or decrease in costs from a particular course of action when compared to its alternatives the difference between controllable costs and non-controllable costs.
S1 - After service department costs are allocated to other departments, costs are re-circulated back to that service department, under the step method. S2 - When using the direct method of allocating service department costs, it is necessary that the cost of the service department which serves the greatest number of departments is allocated first. a. Only S1 is true b. Only S2 is true c. Both S1 & S2 are true d. Both S1 & S2 are false