What is conceptually the most defensible method for allocating support-department costs? Why?

Q: What are the three methods of departmental cost allocation? Explain how they differ, which is…

A: Departmental cost allocation Departmental cost allocation refers to the allocation of overhead…

Q: How is a departmental contribution to overhead an effective tool in assessing each department's…

A: Departmental contribution to overhead is the amount of money a deptt. has available after its…

Q: managers duty to take appropriate action when accounting reports indicate

A: Managers are involved in planning and implementing appropriate actions to lead the organization…

Q: Why are support department costs difficult to apply to products?

A: Given: The difficulty in applying the support department costs on products.

Q: 1- What are the four cost categories of a costs of quality program? 2- What are relevant revenues…

A: Cost of quality program's costs can be divided into two main groups and four sub-groups. Main two…

Q: There are two types of costs originating from the modern agency problem: direct costs and indirect…

A: Costs The expenditure incurred on that is imputable to ascertain the value of a given item is…

Q: Why are cost centers considered to be more appropriate than profit centers for production…

A:

Q: Cost centres is a. Amounts of expenditure attributable to various activities b. Units of product or…

A: cost centre is a department within a business to which costs can be allocated..... Cost centre is…

Q: In a management setting, does Transfer Pricing affects the previous topics - Absorption & Variable,…

A: Transfer pricing is the strategy which is adopted by the company in order to charge the amount for…

Q: Discuss two different criteria Mr. Smith can use to determine the sequence for allocating support…

A: Cost allocation is a process of assigning or allocating indirect cost to each and every unit using a…

Q: “Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.

A: Department Indirect Cost Rate:  Department indirect cost rate is the rate to find out the proportion…

Q: What is the danger in allocating common fixed costs among products or other segments of an…

A: The costs which are not allocated to any specific segment in the business organization are called…

Q: What are support departments, and why are their costs allocated to other departments?  What process…

A: generally supporting departments are the departments that provide services to main departments. so…

Q: Give an example of a common resource in an organization. List some of the opportunity costs…

A: Opportunity cost: Opportunity cost refers to the forgone revenue that could have been generated…

Q: What are the limitations of joint product and departmental cost allocation?

A: The limitations of joint product and departmental cost allocation.

Q: Give examples of allocation bases used to allocate support-department cost pools to operating…

A:

Q: When evaluating the performance of a manager, why shouldfixed costs be divided into the categories…

A: Controllable expenditure: Controllable expenditure is an expenditure that is directly controllable…

Q: The order in which the costs of service departments are allocated will affect the amounts allocated…

A: There are two type of departments in the business. One is operating departments and other is Service…

Q: Which service department cost allocation method provides for reciprocal allocation of service costs…

A: The correct answer is (A) Method of Algebra or Algebraic Method

Q: Which of the following is not a benefit of budgeting? a. It sets some standards to evaluate…

A: Budgeting is the activity of planning of costs and expenses for an entity. It is one of the most…

Q: Why does dual cost allocation improve the resulting allocation of service department costs?

A: Dual Cost Allocation segregates total costs into two parts Fixed Costs. Variable Costs. Each…

Q: Explain the difference between the engineered-cost and discretionary-cost approaches to…

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Which of the following statements best describes a profit center?a. The responsibility for combining…

A: The profit center affects the major profit decisions of the authority that includes the choosing…

Q: be applied when the step method of allocating service department costs is used?     The sequence…

A: step method allocation of department costs, allocate some of the service department costs to other…

Q: how to solve plantwide overhead rate versus departmental rates, effects on pricing decisions?

A: Since there are multiple sub parts in the question, calculation will be given for first three sub…

Q: Explain briefly the main differences between the direct, step-down, and reciprocal-services methods…

A: Cost Allocation Method: The cost allocation method is the method by which the costs to be assigned…

Q: Distinguish between direct and indirect expenses and identify bases for allocating indirect expenses…

A:

Q: A unit of an organization is referred to as a profit center if it has:   Multiple Choice…

A: Profit Center: The responsibility of the controlling costs and generating revenues is of profit…

Q: Which one of the following is NOT a budgetary benefit? It establishes the organization's goal. It…

A: Budgeting is a written plan covering projected activities of a firm for a defined period of time…

Q: s it true that the direct method is a method of cost allocation that charges costs of service…

A: Direct Method- Direct method refers to the method under which the cost of the service department is…

Q: Which method of allocating support department costs is most accurate of the three methods.

A:

Q: Classify the following fixed costs as normally being either committed or discretionary:f. Management…

A: Cost:   It is the economic value of resources incurred by a firm to manufacture a product or render…

Q: Why would a corporation choose process costing over task order costing? How are the two systems…

A: Here is the Answer

Q: How many cost pools should a company use when allocating costs to divisions, channels, and…

A: Cost Pool: The cost accountant makes individual group of all the indirect cost used in an item. The…

Q: How do budgeted cost rates motivate the support-department manager to improve efficiency?

A:

Q: How would merging of two systems affect the costing of the new system including the impact on…

A: The act of distinguishing, investigating, , measuring, interpreting, and conveying the monetary data…

Q: components of the Contribution Margin Income Statement, how does management use this in the decision…

A:

Q: Distinguish among the three methods of allocating the costs of support departments to operating…

A:

Q: Operating leverage refers to the extent to which an organization's cost structure is made up of:…

A: Operating leverage is a ratio of how of change in sales effect the change in operating income. It…

Q: What is a potential disadvantage of the reciprocal method? a. It is the most complex method of cost…

A: Reciprocal method: It is the method in which the allocation of costs spent on other departments by…

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.