90. Peake 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:
For performance evaluation purposes, how much Maintenance Department cost should be
charged to the Stains Division at the end of the year?
91. Wilson 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?
92. ____________ is the delegation of decision-making authority to lower management levels
within the organization.
93. Which of the following is not a benefit of decentralization?
94. Which of the following is not a cost of decentralization?
95. Which of the following is considered a responsibility center?
96. Which of the following departments would not be a cost center?
97. Which of the following subunits would most likely be considered a only cost center?
98. The following is a summarized income statement for Royal Manor Co.’s profit center
12608 for April:
Which of the following amounts is most likely subject to the control of the profit center’s
manager?
99. Revenue center and profit center managers are both responsible for meeting
100. Which of the following subunits is most likely to be considered an investment center?
101. Cost allocation of shared facilities cost is intended to remind managers of:
102. Dual allocation is a cost allocation approach that separates direct and indirect costs,
tracing the direct costs directly to the department that:
103. 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:
104. The concepts of cost allocation that are used in manufacturing can also apply in:
105. Which of the following is not one of the objectives of cost allocation?
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106. Atlantic Hotels operates a centralized call center for the reservation needs of its time-
share units. Costs associated with use of the center are charged to the time-share group (Luxury,
Resort, Standard, and Budget) where a reservation is made on the basis of time on a call. Idle
time of the reservation agents, time spent on calls where no reservation is made, and the fixed
cost of the equipment are allocated on the number of reservations made in each group. Due to
recent increased competition in the time-share business, the company has decided that it is
necessary to more accurately allocate its costs to price its services competitively and profitably.
During the current period, the use of the call center for each group was as follows (in thousands
of seconds for time usage and in number of reservations):
During this period, the cost of the computer center amounted to $2,410,000 for personnel and
$1,240,000 for equipment and other costs.
Required:
Determine the allocation to each of the divisions using (you may round all decimals to three
places):
a. a single rate based on time used.
b. multiple rates based on time used (for personnel costs) and number of reservations (for
equipment and other cost).
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107. Baltic Resorts operates a centralized call center for the reservation needs of its time–
share units. Costs associated with use of the center are charged to the time-share group (Luxury,
Standard, and Budget) where a reservation is made on the basis of time spent on a call. Due to
recent increased competition in the time-share business, the company has decided that it is
necessary to more accurately allocate its costs to price its services competitively and profitably.
During the current period, the use of the call center for each group was as follows (in thousands
of seconds for time usage and in number of reservations):
During this period, the cost of the computer center amounted to $1,760,000 for personnel and
$1,240,000 for equipment and other costs.
Required:
Determine the allocation to each of the divisions using (round all decimals to three places):
a. a single rate based on time used.
b. multiple rates based on time used (for personnel costs) and number of reservations (for
equipment and other cost).
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108. Caspian Resorts operates a centralized call center for the reservation needs of its time–
share units. Costs associated with use of the center are charged to the time-share group (Luxury
and Standard) where a reservation is made on the basis of time spent on a call. Due to recent
increased competition in the time-share business, the company has decided that it is necessary to
more accurately allocate its costs to price its services competitively and profitably. During the
current period, the use of the call center for each group was as follows (in thousands of seconds
for time usage and in number of reservations):
During this period, the cost of the computer center amounted to $1,220,000 for personnel and
$960,000 for equipment and other costs.
Required:
Determine the allocation to each of the divisions using (round all decimals to three places):
a. a single rate based on time used.
b. multiple rates based on time used (for personnel costs) and number of reservations (for
equipment and other cost).
109. The Document Creation Center (DCC) for Aelerion Corp. provides document services for
three departments in the Denver office. The following budget has been prepared for the month.
Required (use three decimal places in your calculations):
a. If DCC uses a dual rate for allocating its costs based on usage, how much cost will be allocated
to the three user departments?
110. The legal department for Buffet Corp. provides legal services for four departments in the
Omaha office. The following budget has been prepared for the month.
Required (use three decimal places in your calculations):
a. If Buffet uses a dual rate for allocating its costs based on usage, how much cost will be
allocated to the four user departments?