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True or False
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1
A service department is a subunit of an organization that provides services to other departments but is not directly involved in the production of goods or services that the organization provides (sells) to outsiders.
A)True
B)False
2
The direct method of service department cost allocation may be described as a method of service department cost allocation in which service department costs are allocated directly to the production departments.
A)True
B)False
3
The direct method of service department cost allocation ignores the provision of services of one service department to another service department.
A)True
B)False
4
The dual cost allocation method of allocating service department costs is described as a method of service department cost allocation in which service department costs are allocated first to service departments and then to production departments.
A)True
B)False
5
When using or implementing a step-down method of service department costs allocation, the accountant should start with the service department that provides the fewest services.
A)True
B)False
6
The reciprocal-services method of service department cost allocation may be described as a method of service department cost allocation that accounts for the mutual provision of reciprocal services among all service departments.
A)True
B)False
7
Both the direct method and the step-down method of service department cost allocation ignore the fact that some service departments perform services for other service departments.
A)True
B)False
8
When allocating service department costs, distinguishing between variable costs and fixed costs will prevent an unfair allocation of fixed costs to production departments.
A)True
B)False
9
The dual cost allocation method of allocating service department costs is described as an allocation approach that allocates variable costs in proportion to short-run usage and allocates fixed costs in proportion to long-run usage.
A)True
B)False
10
Dual cost allocation works with a direct method of service department cost allocation but not with a step-down method of service department cost allocation.
A)True
B)False
11
Under dual cost allocation, the managers of using departments might tend to understate their expected long-run service needs from the providing department(s).
A)True
B)False
12
When service department costs are allocated to production departments, budgeted service department costs would be a better basis of allocation than actual costs.
A)True
B)False
13
The extent of allocation is increased in advanced manufacturing systems, such as CIM.
A)True
B)False
14
One advantage of changing from a traditional-costing system to an activity-based-costing (ABC) system is that activity costs are assigned to activity cost pools rather than to service departments.
A)True
B)False
15
A production process in which a Ponderosa pine log is cut into various dimensions and grades of lumber is an example of a joint production process.
A)True
B)False
16
The split-off point is where the joint products become separate and identifiable products in a joint production process.
A)True
B)False
17
The dairy industry's milk production can result in the production of several joint products.
A)True
B)False
18
The physical-units method of allocating joint costs will result in each joint product having the same per unit cost of allocated joint costs.
A)True
B)False
19
The physical-units approach to allocating joint product costs is the most preferred method since its application is easy and simple.
A)True
B)False
20
The relative-sales-value method of joint cost allocation is based on the relative sales value of each joint product at the split-off point, but the net-realizable-value method of joint cost allocation is based, in part, on any separable costs incurred after the split-off point.
A)True
B)False
21
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Using the relative-sales-value method, the dollar amount of joint cost allocated to Joint Product A will be $900.
A)True
B)False
22
The sales value of gasoline less separable costs incurred after the split-off point is called the net realizable value.
A)True
B)False
23
The net-realizable-value method of joint cost allocation can be described asa method in which joint costs are allocated to the joint products in proportion to the net realizable value of each joint product.
A)True
B)False
24
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Using the net-realizable-value method, the dollar amount of joint cost allocated to Joint Product B is $1,020.
A)True
B)False
25
A joint product with minimal value relative to the other joint products is called a by-product.
A)True
B)False
26
The sawdust, bark, and wood chips that result from processing pine logs might be considered by-products.
A)True
B)False
27
One method of accounting for the cost of a by-product is to subtract its net realizable value from the cost of the joint process, then allocating the remaining joint cost to the major products.
A)True
B)False





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