Cost Accounting: A Managerial Emphasis, 15th Edition
15th Edition
ISBN: 9780133803815
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.9Q
“Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.
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Students have asked these similar questions
“Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.
What is a potential disadvantage of the reciprocal method?
a. It is the most complex method of cost allocation.
b. Both fixed and variable costs are allocated based on the computed cost base.
c. It considers the support department cost as its own department cost.
d. All the above.
“To ensure unbiased cost allocations, fixed costs should be allocated on the basis of estimated long-run use by user-department managers.” Do you agree? Why?
Chapter 5 Solutions
Cost Accounting: A Managerial Emphasis, 15th Edition
Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8QCh. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q
Ch. 5 - Prob. 5.11QCh. 5 - Prob. 5.12QCh. 5 - Activity-based costing is the wave of the present...Ch. 5 - Increasing the number of indirect-cost pools is...Ch. 5 - The controller of a retail company has just had a...Ch. 5 - Prob. 5.16ECh. 5 - ABC, cost hierarchy, service. (CMA, adapted)...Ch. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Prob. 5.21ECh. 5 - Prob. 5.22ECh. 5 - Prob. 5.23ECh. 5 - Prob. 5.24ECh. 5 - Prob. 5.25ECh. 5 - Prob. 5.26ECh. 5 - Prob. 5.27ECh. 5 - Prob. 5.28ECh. 5 - Prob. 5.29ECh. 5 - Prob. 5.30PCh. 5 - Prob. 5.31PCh. 5 - Prob. 5.32PCh. 5 - Prob. 5.33PCh. 5 - Prob. 5.34PCh. 5 - Prob. 5.35PCh. 5 - Prob. 5.36PCh. 5 - Prob. 5.37PCh. 5 - Prob. 5.38PCh. 5 - Prob. 5.39PCh. 5 - Prob. 5.40PCh. 5 - Prob. 5.41PCh. 5 - Prob. 5.42P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following statements is (are) false regarding the direct method of allocating service department costs? (A) The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method. (B) Once an allocation is made from a service department using the direct method, no further allocations are made back to that department.arrow_forwardIs it true that the direct method is a method of cost allocation that charges costs of service departments to production departments and ignores any services used by other service departments?arrow_forwardWhat is conceptually the most defensible method for allocating support-department costs? Why?arrow_forward
- What are the limitations of joint product and departmental cost allocation?arrow_forwardWhen allocating service department costs to production departments, why is the standard cost that the service department was expected to incur, rather than the actual cost that was incurred, used in the allocation?arrow_forwardWhen would management most likely use the net realizable value method of joint cost allocation?arrow_forward
- In determining the costs transferred to a third department from a second department, are the costs from a first department considered? Are they considered in the computation of the ending work in process in the second department?arrow_forwardWhen using the sequential distribution method of distributing service department costs, if a service department receives services from other service departments, will those costs be allocated back to it even though it was the first service department distributed?arrow_forwardWhat is the primary objective in accumulating costs by departments?arrow_forward
- What is the purpose of assigning facility costs to value streams, using a fixed price?arrow_forwardWhy would standard cost be a more appropriate transfer cost between cost centers than actual cost?arrow_forwardExplain the difference between the engineered-cost and discretionary-cost approaches to evaluatingsupport departmentsarrow_forward
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What is Cost Allocation? Definition & Process; Author: FloQast;https://www.youtube.com/watch?v=hLhvvHvZ3JM;License: Standard Youtube License