Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 12, Problem 5RQ
To determine
Introduction: The foundation upon which an organization allocates its administrative expenditures is referred to as an allocation base. The number of people employed, the numbers of machines hours required, the amount of energy utilized, the floor area in use, and the time it takes all contribute to the allocation base.
If the use of numbers of employees as the allocation base is right for A Hotel and Resorts and for which type of company it is not best to use.
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When allocating support department costs, managers must identify cost pools. The choice of cost pools is:
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not influenced by the allocation base.
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not important, because all support department costs will eventually be allocated anyway.
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influenced by the design of the accounting information system.
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determined by whether a company uses IFRS or ASPE.
.  There are two (2) costing systems (techniques) that organizations use to budget for the operational/production costs; thus, Marginal Costing and Absorption Costing. The use of each system is dependent on the information needs of the business or organization.These costing systems use the same costs, but they are treated differently according to their behavior.Required:In a detailed manner, look at each of these costing systems and then make a comparison between them.
Which of the following is not a reason for banks to use activity-based costing?
Oa. to determine service quality
Ob. to determine profitability of services provided
Oc. to determine the amounts charged to customers for services provided
Od. all of the above
Chapter 12 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 12 - Why is goal congruence important to an...Ch. 12 - Define and give examples of the following terms:...Ch. 12 - Prob. 3RQCh. 12 - Explain the relationship between performance...Ch. 12 - Prob. 5RQCh. 12 - What is the key feature of activity-based...Ch. 12 - Prob. 7RQCh. 12 - Define and give examples of the following terms:...Ch. 12 - Give an example of a common resource in an...Ch. 12 - Explain how and why cost allocation might be used...
Ch. 12 - Define the term cost allocation base. What would...Ch. 12 - Referring to Exhibit 125, why are marketing costs...Ch. 12 - Prob. 13RQCh. 12 - Why do some managers and accountants choose not to...Ch. 12 - Why is it important in responsibility accounting...Ch. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 21RQCh. 12 - Prob. 22RQCh. 12 - Prob. 23RQCh. 12 - Define the term manufacturing cycle efficiency.Ch. 12 - Prob. 25RQCh. 12 - What is meant by aggregate productivity, and what...Ch. 12 - For each of the following organizational subunits,...Ch. 12 - Prob. 28ECh. 12 - Prob. 29ECh. 12 - The following data pertain to the Waikiki Sands...Ch. 12 - Lackawanna Community College has three divisions:...Ch. 12 - Countywide Cable Services, Inc. is organized with...Ch. 12 - Prob. 36ECh. 12 - Prob. 37ECh. 12 - Prob. 38ECh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Rocky Mountain General Hospital serves three...Ch. 12 - Refer to the organization chart for Rocky Mountain...Ch. 12 - Prob. 44PCh. 12 - Buckeye Department Stores, Inc. operates a chain...Ch. 12 - Building Services, Co. (BSC) was started a number...Ch. 12 - Warriner Equipment Company, which is located in...Ch. 12 - Prob. 49PCh. 12 - MedTech, Inc. manufactures diagnostic testing...Ch. 12 - Prob. 51PCh. 12 - Cathys Classic Clothes is a retailer that sells to...Ch. 12 - Pacific Rim Industries is a diversified company...
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- Which of the following is not a reason for banks to use activity- based costing? C a. to determine profitability of services provided Ob. to determine service quality c. to determine the amounts charged to customers for services provided Od. all of the abovearrow_forwardYou are Accountant of the company and you are being asked to submit a report to the Managementregarding following matters:1) Briefly discuss the different cost classifications which are relevant for a business like RaajjeFresh.2) Using the information in Annex 1, identify the Fixed Costs and Variable Costs, showing them ina table.3) Using the table prepared in (2) above, prepare a break-even chart for the given period (withclear labels).4) Using the information in Annex 2, prepare an overhead summary, showing clearly the totaloverheads for each department. Prepare the following calculations using the total overhead foreach department:i. Calculate the Overhead Absorption Rate (OAR) based on Labour hours.ii. Calculate Overhead Absorption Rate (OAR) based on number of units (for 3000 units)iii. Calculate the Total Cost per unit from the available information (use OAR based on costper unit)iv. Which of the above absorption bases is more suitable for Raajje Fresh?arrow_forwardWhich of the following is false when using ABC in a service industry? analyze operations accumulated overhead costs by activity cost pools identify activities identify and use cost drivers to assign the cost pools to productsarrow_forward
- Which of the following is NOT a period cost? Select one: O a. manufacturing costs. Ob general and administrative costs. Oc marketing costs. Od. research and development costs. Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy? Select one: a. What substitute products exist in the marketplace? Ob. Who are our most important customers? Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? Od. Will adequate cash be available to implement the strategy?arrow_forwardWhich of the following is not a reason for banks to use activity-based costing? a.to determine service quality b.to determine profitability of services provided c.to determine the amounts charged to customers for services provided d.All of these choices are correct.arrow_forwardPlease Do not Give image format Allocate manufacturing, ordering, and selling costs to the two customer groups by using an activity-based management (ABM) allocation basis. Calculate the net profit before tax (NPBT) for each customer group using an ABM allocation basis.arrow_forward
- compute the customer level operating income of this customer for abc corporation using the companys activity based costing systemarrow_forwardHow do I find the "actual variable costs" in a list of transactions? It would be direct labor, direct material, variable manufacturing overhead, variable selling expense, and variable administrative expense, but what does that look like in a list of transactions for a business. How do I identify those costs?arrow_forwardWhich of the following would be true for a service company? a. ABC helps the company make more informed decisions about services. b. Service companies use only a few activities, so a plantwide overhead allocation is always appropriate. c. Most of the company’s costs are for direct materials and direct labor. Indirect costs are a small proportion of total costs. d. All of the above are true.arrow_forward
- Which one of the following is not a step in allocating the support department cost to the production department? Select one: a. Trace all the overhead cost b. Divide the departments in to support and producing departments c. Undertake a breakeven analysis d. Divide the company in departmentsarrow_forwardRank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments’ costs to the operating departments based on the step-down method.arrow_forwardOn assigning costs to different products. What is the benefit of cost assignment? How does this aid the organization in financial decisions?arrow_forward
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