87) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
Mesa Telcom uses the single rate method and allocates common costs based on the number of
connections. What is the total computer server network cost allocated to the Commercial
Division?
A) $480,000.
B) $514,286.
C) $600,000.
D) $1,200,000.
88) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
What is the allocation rate for the upcoming year, assuming Mesa Telcom uses the single-rate
method and allocates common costs based on the time on the network?
A) $20.00.
B) $16.00.
C) $4.00.
D) $2.86.
89) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
Mesa Telcom uses the single rate method and allocates common costs based on the time on the
network. What is the total computer server network cost allocated to the Retail Division?
A) $429,000.
B) $600,000.
C) $657,800.
D) $3,000,000.
90) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
The cost accountant determined $1,700,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is the total server network costs allocated to the Commercial
Division, assuming the company uses dual-rates to allocate common costs?
A) $514,286.
B) $480,000.
C) $600,000.
D) $565,000.
91) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
The cost accountant determined $1,700,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is total server network costs allocated to the Retail Division
(rounded to the nearest whole dollar), assuming the company uses dual-rates to allocate common
costs?
A) $741,667.
B) $657,143.
C) $425,000.
D) $211,765.
92) Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common
costs of the company’s computer server network. The annual common costs are $2,400,000. You
have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 60,000 120,000
Retail 80,000 150,000
Consumer 100,000 330,000
The cost accountant determined $1,700,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is total server network costs allocated to the Consumer
Division (rounded to the nearest whole dollar), assuming the company uses dual-rates to allocate
common costs?
A) $1,200,000.
B) $1,093,333.
C) $954,896.
D) $750,000.
93) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-.rate for allocating its costs based on usage, how much cost will be allocated
to the Software Development Department?
A) $98,000.
B) $104,000.
C) $112,000.
D) $118,857.
94) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs based on usage, how much cost will be allocated
to the Training Department?
A) $183,750.
B) $210,000.
C) $195,000.
D) $222,857.
95) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-ate for allocating its costs based on usage, how much cost will be allocated to
the Management Department?
A) $168,000.
B) $156,000.
C) $178,286.
D) $147,000.
96) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the
Management Department, assuming the Management Department actually made 2,100,000
copies during the year?
A) $147,000.
B) $136,500.
C) $159,000.
D) $150,761.
97) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the
Management Department, assuming the Management Department actually made 2,950,000
copies during the year?
A) $184,500.
B) $191,750.
C) $211,783.
D) $206,500.
98) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training
Department, assuming the Training Department actually made 3,250,000 copies during the year?
A) $227,500.
B) $211,250.
C) $217,500.
D) $223,017.
99) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Training
Department, assuming the Training Department actually made 2,770,000 copies during the year?
A) $180,050.
B) $190,079.
C) $193,900.
D) $203,100.
100) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software
Development Department, assuming the Software Development Department actually made
1,160,000 copies during the year?
A) $75,400.
B) $98,800.
C) $81,200.
D) $84,312.
101) The Document Creation Center (DCC) for Arlington Corp. provides photocopying and
document services for three departments in the Minneapolis office. The following budget has
been prepared for the year.
Available capacity 8,000,000 pages
Budgeted usage:
Software Development 1,600,000 pages
Training 3,000,000 pages
Management 2,400,000 pages
Cost equation $280,000 + $0.03 per page
If DCC uses a dual-rate for allocating its costs, how much cost will be allocated to the Software
Development Department, assuming the Software Development Department actually made
1,780,000 copies during the year?
A) $117,400.
B) $115,700.
C) $124,600.
D) $129,376.
102) Darren Corporation’s Maintenance Department provides services to the company’s two
operating divisions — the Paints Division and the Stains Division. The variable costs of the
Maintenance Department are budgeted based on the number of cases produced by the operating
departments. The fixed costs of the Maintenance Department are budgeted based on the number
of cases produced by the operating departments during the peak period. Data appear below:
Maintenance Department:
Budgeted variable cost $ 2 per case
Budgeted total fixed cost $ 830,000
Paints Division:
Percentage of peak period capacity required 30%
Actual cases 20,000
Stains Division:
Percentage of peak period capacity required 70%
Actual cases 63,000
For performance evaluation purposes, how much Maintenance Department cost should be
charged to the Paints Division at the end of the year?
A) $298,800.
B) $498,000.
C) $289,000.
D) $240,000.
103) The fixed costs of Black Company’s personnel department are allocated to operating
departments on the basis of direct labor-hours. The following data have been provided:
Operating Department
X Y
Direct labor-hours — Long-run average 15,000 10,000
Direct labor-hours — Actual 10,000 6,000
The fixed costs of the personnel department are budgeted at $56,000 per year and are incurred in
order to support long-run average requirements. How much of this fixed cost should be charged
to Operating Department X at the end of the year for performance evaluation purposes?
A) $35,000.
B) $33,600.
C) $52,500.
D) $22,400.
104) Poole Corporation’s Maintenance Department provides services to the company’s two
operating divisions — the Paints Division and the Stains Division. The variable costs of the
Maintenance Department are budgeted based on the number of cases produced by the operating
departments. The fixed costs of the Maintenance Department are budgeted based on the number
of cases produced by the operating departments during the peak period. Data appear below:
Maintenance Department:
Budgeted variable cost $ 5 per case
Budgeted total fixed cost $ 558,000
Actual total variable cost $ 322,504
Actual total fixed cost $ 561,490
Paints Division:
Percentage of peak period capacity required 30%
Budgeted cases 15,000
Actual cases 15,040
Stains Division:
Percentage of peak period capacity required 70%
Budgeted cases 47,000
Actual cases 46,980
For performance evaluation purposes, how much Maintenance Department cost should be
charged to the Stains Division at the end of the year?
A) $669,623.
B) $637,339.
C) $625,500.
D) $657,584.
105) Waterford Company maintains a cafeteria for its employees. For June, variable food costs
were budgeted at $45 per employee based on a budgeted level of 200 employees in other
departments. During the month, an average of 190 employees worked in other departments and
actual food costs totaled $9,250. How much food cost should be charged to the other
departments at the end of the month for performance evaluation purposes?
A) $9,000.
B) $9,250.
C) $8,550.
D) $9,737.
106) Cost allocation of shared facilities cost is intended to remind managers of:
A) the cost of using a shared resource.
B) both the cost and value of using shared resources.
C) how much capacity a firm has.
D) why the firm invests in these facilities.
107) The dual-rate method is a cost allocation approach that separates a common cost into fixed
and variable components and:
A) allocates only the fixed components.
B) allocates only the variable components.
C) allocates all components with a single standard allocation base.
D) allocates each component using a different allocation base.
108) If a budgeted activity base is used as the base in cost allocation, each department’s cost
allocation will be predictable, and not influenced by the:
A) actual total cost.
B) change in activity.
C) variations from budget.
D) actual usage in other departments.
109) The concepts of cost allocation that are used in manufacturing can also apply in:
A) service and not-for-profit industries.
B) service industries only.
C) not-for-profit industries only.
D) limited instances outside of manufacturing.