Department Costs, Common Costs and Revenues MCQs for Entry Test with Answers and Explanations [PDF]

The methods used to allocate costs of reciprocal support departments include __________?

Option A: direct method

Option B: step down

Option C: reciprocal method

Option D: all of above

Correct Answer: all of above ✔

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In incremental cost allocation method, the cost object user who is ranked second in ranking order is known as __________?

Option A: First incremental user

Option B: primary user

Option C: secondary user

Option D: second incremental user

Correct Answer: First incremental user ✔

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The method, which allocates the cost of support department, to operating and support departments is known as __________?

Option A: indirect method

Option B: direct method

Option C: step down method

Option D: reciprocal method

Correct Answer: step down method ✔

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The method, which allocates cost of support department for operating departments by recognizing all the mutual services provided is classified as __________?

Option A: indirect method

Option B: direct method

Option C: step down method

Option D: reciprocal method

Correct Answer: reciprocal method ✔

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According to incremental method, the party which receives the highest ranking in allocation of common cost is classified as __________?

Option A: Third incremental party

Option B: second incremental party

Option C: primary party

Option D: First incremental party

Correct Answer: primary party ✔

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If the employees of division A work for 8000 hours for $90 per hour, then the rate must be paid in division B in accordance of single rate method will be __________?

Option A: $90 per hour

Option B: less than $90 per hour

Option C: greater than $90 per hour

Option D: none of above

Correct Answer: $90 per hour ✔

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Support department cost allocation method which makes no difference between variable and fixed costs is classified as __________?

Option A: sales mix allocation method

Option B: dual-rate cost-allocation method

Option C: single rate cost allocation method

Option D: quantity variance allocation method

Correct Answer: single rate cost allocation method ✔

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A particular term for which specific revenue measurement is required is known as __________?

Option A: revenue allocation

Option B: revenue object

Option C: revenue increment

Option D: reciprocal revenue

Correct Answer: revenue object ✔

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The method, which uses specific information on products as weights to allocate bundled revenues for each product in bundle is classified as __________?

Option A: step down allocation method

Option B: stand-alone revenue allocation method

Option C: incremental revenue allocation method

Option D: revenue mix allocation method

Correct Answer: stand-alone revenue allocation method ✔

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The third ranked product in incremental revenue-allocation method is known as _________?

Option A: primary product

Option B: First incremental product

Option C: Second incremental product

Option D: Third incremental product

Correct Answer: Third incremental product ✔

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The cost object user, who is ranked first in incremental cost allocation method is known as _________?

Option A: First incremental user

Option B: primary user

Option C: secondary user

Option D: second incremental user

Correct Answer: primary user ✔

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In incremental cost allocation method, the cost object user who is ranked third in ranking order is classified as __________?

Option A: First incremental user

Option B: primary user

Option C: secondary user

Option D: second incremental user

Correct Answer: second incremental user ✔

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The first ranked product, in incremental revenue allocation method, is classified as __________?

Option A: primary product

Option B: First incremental product

Option C: Second incremental product

Option D: Third incremental product

Correct Answer: primary product ✔

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The method which divides the support department cost into two dimensions such as fixed and variable cost pool is classified as __________?

Option A: sales mix allocation method

Option B: dual-rate cost-allocation method

Option C: single rate cost allocation method

Option D: quantity variance allocation method

Correct Answer: dual-rate cost-allocation method ✔

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In stand-alone revenue-allocation method, the type of weights available for this method are __________?

Option A: selling prices as weights

Option B: unit costs as weights

Option C: physical units as weights

Option D: all of above

Correct Answer: all of above ✔

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The costs, which consist of interdepartmental cost allocations plus cost of support department are classified as __________?

Option A: complete reciprocal costs

Option B: artificial costs

Option C: operating costs

Option D: flexible operating costs

Correct Answer: complete reciprocal costs ✔

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The cost of operating activity, facility or any cost object which usually shares by two or more than two users is classified as _________?

Option A: bundled cost

Option B: common cost

Option C: stand-alone cost

Option D: incremental cost

Correct Answer: common cost ✔

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The products, divisions and customers are the examples of __________?

Option A: revenue increment

Option B: reciprocal revenue

Option C: revenue allocation

Option D: revenue object

Correct Answer: revenue object ✔

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The method which ranks cost object incurred by individual users, in ranking order of more responsible users is classified as __________?

Option A: bundled products allocation method

Option B: variable cost allocation method

Option C: stand-alone cost allocation method

Option D: incremental cost allocation method

Correct Answer: incremental cost allocation method ✔

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The method which determines weights of cost allocation by considering cost of each user, as separate entity is known as __________?

Option A: bundled products allocation method

Option B: variable cost allocation method

Option C: stand-alone cost allocation method

Option D: incremental cost allocation method

Correct Answer: stand-alone cost allocation method ✔

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Considering dual rate method, if employees work for 8500 budgeted hours at $120 per hour, and work for 9500 actual hours at $110 per hour, then the total cost would be __________?

Option A: $2,078,000

Option B: $3,078,000

Option C: $2,065,000

Option D: $3,065,000

Correct Answer: $2,065,000 ✔

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The method which allocates the cost of support department to only operating departments is called __________?

Option A: indirect method

Option B: direct method

Option C: step down method

Option D: reciprocal method

Correct Answer: direct method ✔

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The second ranked product in incremental revenue allocation method is termed as __________?

Option A: primary product

Option B: First incremental product

Option C: Second incremental product

Option D: Third incremental product

Correct Answer: First incremental product ✔

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The approaches to allocate costs of support department do not include __________?

Option A: sales mix allocation method

Option B: dual-rate cost-allocation method

Option C: single rate cost allocation method

Option D: both b and c

Correct Answer: both b and c ✔

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The package which consists of two or more products to be sold for single price, but components of products in package have separate stand-alone price is called __________?

Option A: step down product

Option B: dual mix product

Option C: bundled product

Option D: reciprocal product

Correct Answer: bundled product ✔

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The method of revenue allocation, which ranks products included in bundle according to predetermined criteria of management is known as __________?

Option A: step down allocation method

Option B: stand-alone revenue allocation method

Option C: incremental revenue allocation method

Option D: revenue mix allocation method

Correct Answer: incremental revenue allocation method ✔

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The department which directly adds value to product or service is known as __________?

Option A: production department

Option B: operating department

Option C: allocation base department

Option D: both a and b

Correct Answer: both a and b ✔

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The department which provides assisting services to internal departments is classified as __________?

Option A: supply department

Option B: support department

Option C: production department

Option D: allocation base department

Correct Answer: support department ✔

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Department Costs, Common Costs And Revenues MCQs