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CHAPTER 18 Allocation of Support Activity Costs and Joint Costs Answers to Review Questions

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producing the organization's goods or services. However, a service department does provide a service that enables the organization's production process to take place. Production departments, on the other hand, are units that are directly involved in producing the organization's goods and services. An example of a service department in a bank would be the computer department or the personnel department. An example of a "production" department in a bank would be the consumer loan department.

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Top 30 Questions and Answers-Cost Terms, Concepts, and Classification [With PDF]

Today we’ll learn Top “30” Questions and Answers- Cost Terms, Concepts, and Classification.” At the end of the post, you’ll get a basic idea of the Cost Terms, Concepts, and Classification.

It will help you increase your knowledge of cost accounting and help you perform well on any competitive exam.

So let’s get started.

Questions and Answers-Cost Terms, Concepts, and Classification

Question-01: What does cost mean?

Answer: Cost is a sacrificed or forgotten resource to accomplish a particular goal. Usually, a cost is measured as the monetary amount to be paid to acquire goods or services.

Question-02: What does expense mean?

Answer: The expired portion of the cost is called expense. It is the part of the cost from which the benefit of cost has already been taken.

Question-03: What’s the actual cost?

Answer: The cost incurred is an actual cost. It is a historical or past cost.

Question-04: What is the planned cost?

Answer: A predicted or forecast cost (a future cost) is a planned cost.

Question-05: What are the direct costs?

Answer: Direct costs are linked to and can be traced in an economically feasible way to the specific cost object.

Question-06: What are the indirect costs?

Answer: Indirect costs relate to the particular cost object but cannot be tracked in an economically feasible manner.

Question-07: What is the accumulation of costs?

Answer: Cost accumulation is the collection using an accounting system of cost data in some organized manner.

Question-08: What is the allocation of costs?

Answer: The term allocation of costs is used to describe the distribution of indirect costs associated with a specific cost object.

Question-09: What variables influence Direct and Indirect Cost Classifications?

Answer: The variables influence direct and indirect cost classifications are as follows:

  • The materiality of the cost.
  • Available technologies for collecting information.
  • Operations design.

Question-10: What are the two basic types of cost-behavior patterns?

Answer: The two basic types of cost-behavior patterns are

  • Variable Costs and
  • Fixed Costs

Question-11: What’s the variable cost?

Answer:  The variable cost is a cost that changes in total in proportion to changes in the total activity or volume related level.

Question-12: What are the examples of variable costs?

Answer: The examples of variable costs are Direct Material, Direct Labor, and variable overheads.

Question-13: What is the fixed cost?

Answer: The fixed cost is a cost that, despite broad changes in the related level of total activity or volume, remains unchanged in total for a given period.

Question-14: What are the examples of Fixed Cost?

Answer: The examples of fixed costs are Administrative Salaries, Rent, Insurance, and Rates Etc.

Question-15: What is a semi-variable cost?

Answer: Semi-variable costs contain both fixed and variable components and are thus partially affected by changes in activity levels.

Question-16: What are the examples of semi-variable costs?

Answer: The example of semi-variable costs are gas, Telephone bill, and electricity.

Question-17: What is a cost center?

Answer: Any department, division, or segment of a company can be held responsible only for cost, not for revenue, profit, or Investment. For example, Purchase, Admin, Research and Development, etc.

Question-18: What is Cost Driver?

Answer: A cost driver is a variable that causally impacts costs over a given period, such as the level of activity or volume.

Question-19: What is the cost Pool?

Answer: A cost pool is a group of individual costs. A company uses a specific cost allocation base to allocate to cost objects.

Question-20: What is a cost tracing?

Answer: Cost tracing is an assignment of direct costs to a particular cost object.

Question-21: What are the costs of inventory?

Answer: Inventory costs are all costs of a product which, when incurred, are considered as assets in the balance sheet and become the cost of goods sold only when the product is sold. All manufacturing costs are inventory costs for manufacturing-sector companies.

Question-22: What are the types of inventory?

Answer: The types of inventory are as follows;

  • Direct Material Inventory
  • Work-in-process Inventory
  • Finished Goods Inventory

Question-23: What is the Period Cost?

Answer: Period costs are all costs in the income statement other than the cost of goods sold. The periodic cost incurred in the accounting period. Because they are expected to benefit from revenue over that period and are not expected to benefit from revenue over future periods.

Question-24: What are the examples of period cost?

Answer: The example of period costs are marketing expenses, distribution expenses, customer support expenses, etc.

Question-25: What is cost control?

Answer: Cost control is known as a technique used to maintain costs according to the standards set.

Question-26: What is cost reduction?

Answer: A method used to customize the unit price without reducing its quality is known as cost reduction.

Question-27: What is the relevant range?

Answer: The relevant range is the normal activity level or volume band. A specific relationship exists between the level or volume of activity and the cost.

Question-28: What is the meaning of unit cost? And how to calculate the unit cost?

Answer: A unit cost is an average cost calculated by dividing the total cost by the corresponding number of units.

Per unit cost=Total manufacturing costs/ Number of units manufactured

Question-29: What’s the prime cost?

Answer: All direct manufacturing expenses are prime costs.

Prime costs = Direct material costs + Direct manufacturing labor costs

Question-30: What are the conversion costs?

Answer: All manufacturing costs, other than direct material costs, are conversion costs. All manufacturing costs incurred to convert direct materials into finished goods represent conversion costs.

Conversion costs = Direct manufacturing labor costs + Manufacturing overhead costs

I hope, at the end of the article, you have a basic idea about the Cost Terms, Concepts, and Classification . Read these Top “30” Questions and Answers- Cost Terms, Concepts, and Classification and improve your accounting skills and knowledges.

You may also read:

  • Top 25 Questions and Answers-Introduction to Cost Accounting

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Cost Allocation: Joint Products and Byproducts Multiple Choice Questions (MCQ) PDF - 1

Cost Accounting App (Play Store)

The e-Book Cost Allocation Joint Products and Byproducts Multiple Choice Questions and Answers (MCQs) , Cost Allocation Joint Products and Byproducts MCQ Quiz PDF, test 1 to study online MBA Cost Accounting Quizzes . Practice Constant Gross Margin Percentage NRV Method MCQs , Cost Allocation Joint Products and Byproducts trivia questions and answers PDF to prepare for job interview. The Learning App: Cost Allocation Joint Products and Byproducts MCQs App Download for irrelevant joint costs: decision making, sales value: split off method, joint cost basics, net realizable value method career test for online bachelor's degree in business.

The Multiple Choice Question (MCQ Quiz) First step in constant gross margin percentage, Net realizable value (NRV) method is to allocate joint, to compute : total production cost of each product, gross margin percentage, allocated joint costs and cost of split off point with "Cost Allocation: Joint Products and Byproducts MCQs" App Download (Free) for free online classes. Solve constant gross margin percentage nrv method quiz questions , download Google eBook (Free Sample) for online bachelor's degree in business management.

Cost Allocation Joint Products & Byproducts MCQ Quiz PDF Download : Test 1

MCQ 1 : The first step in constant gross margin percentage, Net realizable value (NRV) method is to allocate joint, to compute

MCQ 2 : An additional cost, incurred for some specific activity to bring processed product on to next production stage is

MCQ 3 : A joint cost allocation method is based on relative value of total sales, at the point of split off is classified as

MCQ 4 : In a joint process of production, the product which yields low volume of sales as compared to total sales of other products, specify as

MCQ 5 : The difference between final sales value and separable costs is equal to

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MA Chapter 4 Questions Cost Classification and Behaviour

Reader interactions.

October 28, 2023 at 9:11 am

would some more q8estion like q2

cost allocation questions and answers pdf

October 28, 2023 at 4:59 pm

You should buy a Revision Kit from one of the ACCA Approved Publishers. It is full of exam standard questions for practice.

August 24, 2023 at 3:37 pm

sorry sir i need a better explanation on this question

August 24, 2023 at 4:16 pm

You do not say which question you are referring to!!! (I assume that you have watched the free lectures)

August 20, 2023 at 11:15 am

In question 2 where did the 30,000 come from

August 20, 2023 at 4:22 pm

The difference in the total cost is $35,000. $5,000 of this is the extra fixed cost and so only the remaining $30,000 is the extra variable cost due to producing more units.

June 14, 2023 at 5:23 pm

Hi can you please explain how the difference of costs 35000 was calculated?

June 15, 2023 at 6:45 am

I assume you are referring to question 2, in which case the difference between the total costs is 170,000 – 135,000 = 35,000.

February 18, 2023 at 9:40 am

question second. the variable cost (170000 – 135000)/(22000 – 16000) is 5.83 ig considering that the i got 163320 as my answer

February 18, 2023 at 10:47 am

5,000 of the increase in the total cost is due to the step-up in fixed costs, so only the rest of the difference is due to variable costs. You can find the workings by clicking on ‘review quiz’ after submitting your answers.

February 20, 2023 at 10:59 am

thank you for your assistance got that.

February 20, 2023 at 4:37 pm

You are welcome 🙂

January 25, 2023 at 11:53 pm

How was the total cost for 22000 units derived after find the variable cost per unit which is $5 For Q3

January 26, 2023 at 6:36 am

The fixed cost must be the same at each level, and therefore the only difference between the total cost of 22,000 units and the total cost of 20,000 units must be the extra variable cost f the extra 2,000 units.

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  1. PDF 9 Activity-Based Costing Solutions to Review Questions

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  2. PDF Cost Allocation and Activity-Based Costing Systems

    What is the total cost of the effort? A company uses a machine to make two different products. How much of the cost of the machine belongs to each product? These are all problems of cost allocation, the subject of this chapter. University presidents, city man- agers, corporate executives, and others all face problems of cost allocation.

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  6. PDF Cost Allocation Guide for State and Local Governments

    negotiating, and approving cost allocation plans or indirect cost proposals developed under this part on behalf of all Federal agencies. The cognizant agency for indirect cost is not necessarily the same as the cognizant agency for audit. For assignments of cognizant agencies, see the following:

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    In cost accounting, the product cost is an amount incurred or to be incurred on: • the purchase of materials (often referred to as material costs), • payment of workers (often referred to as labour costs) and • payments for other services necessary to carry out the production activities (often referred to as production overhead costs) The above ...

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    Agencies do not need to have a cost allocation plan in place already to use the Calculator. The tool can help determine what the cost allocation rate for each route/service would be according to vehicle hours and vehicle miles data using the two- variable methodology. Would public transit systems that do not directly report to NTD, but rather ...

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    August 4, 2022 National RTAP and AASHTO Multi-State Transit Technical Assistance Program (MTAP) hosted a Best Practices in Cost Allocation webinar on August 4, 2022. This webinar provided attendees with an understanding of cost allocation and how two State DOTs use it in managing human services transportation programs.

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    Answer: Activity-Based Costing (ABC) is the costing that begins with the tracking of activities and then the output of the product. In other words, it is the costing method mechanism that focuses on activities conducted for the manufacture of goods. Question-02: What is the main purpose of Activity-Based Costing (ABC)?

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    CMA PART 1 iammprabhu Students also studied homework ACG2071 Managerial Accounting Sample Problems - Chapters 35 and 36 - Cost Allocation and ABC Answers appear in red. DRAFT Problem 1 - Dunn Company produces two products, Fred and Barney. Overhead has traditionally been allocated on the basis of direct labor hours.

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    Chapter 1 Basic economic ideas and resource allocation 1.10 Different economic systems An economic system is a way of allocating resources to answer the three fundamental questions of what to produce, how to produce it and for whom. There are three main types of economic systems: a market economy a planned economy a mixed economy

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    Supplemental Guidance on Cost Allocation for Exchange and Medicaid Information Technology (IT) Systems . Questions and Answers . October 5, 2012 . 1. Is there new policy in these questions and answers? No, these questions and answers are intended to clarify existing guidance. This guidance is available at: • Tri-Agency letter released on ...

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    Question-07: What is the accumulation of costs? Answer: Cost accumulation is the collection using an accounting system of cost data in some organized manner. Question-08: What is the allocation of costs? Answer: The term allocation of costs is used to describe the distribution of indirect costs associated with a specific cost object.

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    The e-Book Cost Allocation Joint Products and Byproducts Multiple Choice Questions and Answers (MCQs), Cost Allocation Joint Products and Byproducts MCQ Quiz PDF, test 1 to study online MBA Cost Accounting Quizzes.Practice Constant Gross Margin Percentage NRV Method MCQs, Cost Allocation Joint Products and Byproducts trivia questions and answers PDF to prepare for job interview.

  22. MA Chapter 4 Questions Cost Classification and Behaviour

    thank you for your assistance got that. The fixed cost must be the same at each level, and therefore the only difference between the total cost of 22,000 units and the total cost of 20,000 units must be the extra variable cost f the extra 2,000 units.