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Home / Questions / If an operating division or a product line of a company was eliminated, which of the follo

If an operating division or a product line of a company was eliminated, which of the follo

If an operating division or a product line of a company was eliminated, which of the following statements                                                                       would be TRUE?

A)Traceable fixed costs would be eliminated.

B)Untraceable fixed costs would be eliminated.

C)Variable costs of the product would continue, but be reallocated elsewhere.

D)Traceable fixed costs would continue, but would have to reallocated elsewhere.

 

 

12Assume that AAA Company’s Payroll and Human Resources Department is a centralized service                                                                                                   department serving all the various business units of the company.  If AAA wished to assign the costs of                                                                       the department to the company’s various business units, which of the following would be the MOST                                                                                     appropriate cost driver or assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

13Assume that AAA Company’s Accounting Department is a centralized service department serving all the                                                                       various business units of the company.  If AAA wished to assign the costs of the department to the                                                                                     company’s various business units, which of the following would be the MOST appropriate cost driver or                                                                       assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

 

 

 

14Assume that AAA Company’s Procurement Department is a centralized service department serving all                                                                       business units, which of the following would be the MOST appropriate cost driver or assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

15Assume that AAA Company’s Legal Department is a centralized service department serving all the                                                                                     various business units of the company.  If AAA wished to assign the costs of the department to the                                                                                     company’s various business units, which of the following would be the MOST appropriate cost driver or                                                                       assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

16Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

Before assigning the traceable costs to the division, Henderson needs to calculate a cost per purchase order.  That amount should be:

A)   $56 per purchase order.

B)   $60 per purchase order.

C)   $75 per purchase order.

D)   $82 per purchase order.

 

 

 

 

 

 

 

 

 

17Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Construction Division?

A)  $240,000

B)  $144,000

C)  $192,000

D)  $186,000

 

 

 

 

 

 

18Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Manufacturing Division?

A)  $240,000

B)  $144,000

C)  $192,000

D)  $186,000

 

 

 

 

 

19Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions: Construction, Manufacturing, and Military.  The total monthly costs of                                                                       the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20%                                                                       are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on                                                                       number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Military Division?

A)  $240,000

B)  $  48,000

C)  $192,000

D)  $  60,000

 

 

 

 

 

20Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The Construction

Division has been allocated a total of $192,000 of costs from the procurement department.  Of that amount, 75% is               considered traceable to the three product types within the division—Civil Construction, Residential Construction, and Commercial Construction. The division will calculate  an allocation rate to assign the traceable costs to each of the three product types based on number of purchase orders processed within each product type.  Please refer to the following information:

 

Construction Division

 

 

 

Product lines

 

Revenues

Variable Expenses

Purchase Orders

Civil

 

$36,000

$24,000

450

Residential

 

$98,000

$41,000

900

Commercial

 

$216,000

$60,000

1,850

Total

 

$350,000

$125,000

3,200

         

 

The allocation rate for the three product lines should be:

A)  $45 per purchase order.

B)  $60 per purchase order.

C)  $75 per purchase order.

D)  $80 per purchase order.

 

 

 

 

 

If an operating division or a product line of a company was eliminated, which of the following statements                                                                       would be TRUE?

A)Traceable fixed costs would be eliminated.

B)Untraceable fixed costs would be eliminated.

C)Variable costs of the product would continue, but be reallocated elsewhere.

D)Traceable fixed costs would continue, but would have to reallocated elsewhere.

 

 

12Assume that AAA Company’s Payroll and Human Resources Department is a centralized service                                                                                                   department serving all the various business units of the company.  If AAA wished to assign the costs of                                                                       the department to the company’s various business units, which of the following would be the MOST                                                                                     appropriate cost driver or assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

13Assume that AAA Company’s Accounting Department is a centralized service department serving all the                                                                       various business units of the company.  If AAA wished to assign the costs of the department to the                                                                                     company’s various business units, which of the following would be the MOST appropriate cost driver or                                                                       assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

 

 

 

14Assume that AAA Company’s Procurement Department is a centralized service department serving all                                                                       business units, which of the following would be the MOST appropriate cost driver or assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

15Assume that AAA Company’s Legal Department is a centralized service department serving all the                                                                                     various business units of the company.  If AAA wished to assign the costs of the department to the                                                                                     company’s various business units, which of the following would be the MOST appropriate cost driver or                                                                       assignment basis?

A)Number of purchase orders

B)Number of employees

C)Number of reports prepared

D)Number of service hours provided

 

 

16Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

Before assigning the traceable costs to the division, Henderson needs to calculate a cost per purchase order.  That amount should be:

A)   $56 per purchase order.

B)   $60 per purchase order.

C)   $75 per purchase order.

D)   $82 per purchase order.

 

 

 

 

 

 

 

 

 

17Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Construction Division?

A)  $240,000

B)  $144,000

C)  $192,000

D)  $186,000

 

 

 

 

 

 

18Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The total monthly costs

of the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20% are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Manufacturing Division?

A)  $240,000

B)  $144,000

C)  $192,000

D)  $186,000

 

 

 

 

 

19Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions: Construction, Manufacturing, and Military.  The total monthly costs of                                                                       the procurement department are $480,000.  Of these costs, 80% are traceable to the divisions, and 20%                                                                       are considered untraceable.  Henderson has decided to assign the traceable costs to the divisions based on                                                                       number of purchase orders processed.  Below is a list of the purchase orders per division.

 

Divisions

Purchase Orders

Construction

3,200

Manufacturing

2,400

Military

800

Total

6,400

 

How much of the procurement department’s cost should be assigned to the Military Division?

A)  $240,000

B)  $  48,000

C)  $192,000

D)  $  60,000

 

 

 

 

 

20Henderson Industrial Products uses a centralized service department for procurement of raw materials,                                                                       servicing all three of its divisions—Construction, Manufacturing, and Military.  The Construction

Division has been allocated a total of $192,000 of costs from the procurement department.  Of that amount, 75% is               considered traceable to the three product types within the division—Civil Construction, Residential Construction, and Commercial Construction. The division will calculate  an allocation rate to assign the traceable costs to each of the three product types based on number of purchase orders processed within each product type.  Please refer to the following information:

 

Construction Division

 

 

 

Product lines

 

Revenues

Variable Expenses

Purchase Orders

Civil

 

$36,000

$24,000

450

Residential

 

$98,000

$41,000

900

Commercial

 

$216,000

$60,000

1,850

Total

 

$350,000

$125,000

3,200

         

 

The allocation rate for the three product lines should be:

A)  $45 per purchase order.

B)  $60 per purchase order.

C)  $75 per purchase order.

D)  $80 per purchase order.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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