Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Question
Chapter 11, Problem 10Q
To determine
The operating department is responsible for the production process, whereas the service department is responsible for providing services to the operating department. The cost of the service department is segregated into fixed and variable that have been charged separately to the operating department using different allocation bases.
To explain:
The reason to consider the sales dollars as a poor allocation base for allocating fixed service department costs to the operating department.
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Students have asked these similar questions
Assume that a company has decided not to allocate any support department costs to producing departments. Describe the likely behavior of the managers of the producing departments. Would this be good or bad? Explain why allocation would correct this type of behavior.
Why do departmental overhead rates sometimes result in inaccurate product costs?
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.
Chapter 11 Solutions
Managerial Accounting
Ch. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - Prob. 6QCh. 11 - Prob. 7QCh. 11 - Prob. 8QCh. 11 - Prob. 9QCh. 11 - Prob. 10Q
Ch. 11 - Prob. 1AECh. 11 - Prob. 2AECh. 11 - Prob. 1F15Ch. 11 - Prob. 2F15Ch. 11 - Prob. 3F15Ch. 11 - Prob. 4F15Ch. 11 - Prob. 5F15Ch. 11 - Prob. 6F15Ch. 11 - Prob. 7F15Ch. 11 - Prob. 8F15Ch. 11 - Prob. 9F15Ch. 11 - Prob. 10F15Ch. 11 - Prob. 11F15Ch. 11 - (
$1,000,000
300,000
700,000
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200,000
...Ch. 11 - Prob. 13F15Ch. 11 - Prob. 14F15Ch. 11 - Prob. 15F15Ch. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 -
EXERCISE 11-9 Return on Investment (ROI) and...Ch. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26C
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Similar questions
- Why are support department costs difficult to apply to products?arrow_forwardWhy do product-costing systems based on a single, volume-based cost driver tend to overcost high-volume products? What undesirable strategic effects can such distortion of product costs have?arrow_forwardIn recent years, why has labor become such a small part of product costs and how can its use in overhead allocation perpetrate errors in decision-making?arrow_forward
- Why are cost centers considered to be more appropriate than profit centers for production departments?arrow_forwardWhich of the following statements is false? Cost allocations such as activity-based costing allow manager to evaluate profitability of their products. A budget is a quantitative plan for acquiring and using financial and other resources over a specific forthcoming time period. A detailed activity-based costing system is costly to implement. Using different allocation base does not affect manufacturing overhead costs allocated to each product.arrow_forwardWhich of the following is a reason a company would implement activity-based costing? A. The cost of record keeping is high. B. The additional data obtained through traditional allocation are not worth the cost. C. They want to improve the data on which decisions are made. D. A company only has one cost driver.arrow_forward
- Why is the diect method of support department cost allocation less accurate than the sequential and reciproval services methods?arrow_forwardA limitation of transfer prices based on actual cost is that they Must be adjusted by some markup. Can lead to suboptimal decisions for the company as a whole Lack clarity and administrative convenience. Charge inefficiencies to the department that is transferring the goodsarrow_forwardUsing the revenue per employee ratio as an indicator for productivity will lead to outsourcing of personnel, even when it increases cost.True or false? And why?arrow_forward
- If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate. True or False?arrow_forwardDifferential 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.arrow_forward1. Which of the following is a disadvantage of the Variable Costing method? A. The data available does not easily relate to CVP[Cost - volume - profit] applications. B. The data is not applicable to short-term decision-making situations. C. Much time and effort must be expended to allocate fixed costs to various segments. D. It cannot be used for external reporting purposes. E. All of the above are disadvantages of variable costing.arrow_forward
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