Which of the following methods ignores the fact that some service department?

Allocation of Support Activity CostsBCSVGALOSO,MA.THERESE S.3A4I.Theories1.Which of the following would be considered a service department for an airline?A.Maintenance.B.Information Systems.C.Purchasing.D.All of the above.

2.Consider the following statements about service department costs:I.The costs of the Human Resources Department in a manufacturing organization mustbe allocated to production departments in order to achieve a correct costing ofinventory.II.The allocation of service department costs requires that an organization select both anallocation base and an allocation method.III.Service department cost allocations are more relevant for firms involved in serviceindustries (e.g., repair, health care) than for those involved with manufacturing.Which of the above statements is (are) correct?3.Which of the following methods ignores the fact that some service departments provide

service to other service departments?4.Consider the following statements about the direct method of service department cost

allocation:I.Under the direct method, all service department costs are eventually allocated toproduction departments.II.The order in which service department costs are allocated to production departmentsis important.III.Once a service department's costs have been allocated, no costs are re-circulated backto that department.Which of the above statements is (are) correct?

Allocation of Support Activity CostsBCSVE.III only.F.II and III.G.I, II, and III.5.The Milrose Clinic has two service departments (Human Resources and InformationResources) and two production departments (In-patient Treatment and Out-patientTreatment).The service departments service each other, and studies have shown thatInformation Resources provides the greater amount of service.Which of the followingallocations would occur if Milrose uses the direct method of cost allocation?A.Information Resources cost would be allocated to In-patient Treatment.B.Human Resources cost would be allocated to Information Resources.C.In-patient Treatment cost would be allocated to Out-patient Treatment.D.Out-patient Treatment cost would be allocated to Information Resources.

Question 27. The service department cost allocation method that completely ignores the fact that some servicedepartments provide services to other service departments is called theA*. Direct method.B. Step-down method.C. Reciprocal method.D. Dual cost allocation method.E. Both A and B.

Testbank t/aManagement Accounting: An Australian Perspective3/e by Langfield-Smith, Thorne and Hilton89

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Question 28. The service department cost allocation method that recognises some of the reciprocal servicesbetween service departments is called the

Question 29. The service department cost allocation method that fully accounts for the mutual provision ofservices between service departments is called the

Question 30. The first step under the step-down method is:

Question 31. When the step-down method is used to allocate service department costs, a common way to selectthe first service department in the sequence is to choose the service department whichA. Obtains the highest yield.B. Serves no other service department.C. Has the lowest cost.D*. Serves the greatest number of other service departments.E. Both A and B.

Question 32. After all manufacturing overhead costs have been assigned to the production departments, the stepto assign all manufacturing overhead costs accumulated in a production department to the jobs that thedepartment has worked on is called:

Question 33. Which of the following does not involve a cost benefit trade off?

Which of the following methods ignores the fact that some service departments?

Which of the following methods fully recognizes the fact that some service departments provide service to other service departments?

Which of the following methods of allocating service department costs results in the most accurate product cost?

What are the three methods of allocating service department costs?