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Question : Appendix Chapter 4 1) The step-down method also the: A) reciprocal method. B)

Appendix Chapter 4

1) The step-down method is also the:

A) reciprocal method.

B) indirect method.

C) engineering method.

D) budgeted overhead method.

E) sequential allocation method.

2) The service department is also professionally known as the:

A) support department.

B) internal department.

C) operating department.

D) international department.

E) manufacturing department.

3) Material-handling labor costs are included as part of the ________ labor costs of each department.

A) direct

B) indirect

C) support

D) operating

E) manufacturing

4) Managers compute the plant administration cost-allocation rate as:

A) total plant administration costs - total supervision costs.

B) total plant administration costs × total supervision salaries.

C) total plant administration costs + total supervision salaries.

D) total plant administration costs - total supervision salaries.

E) total plant administration costs / total supervision salaries.

5) Which of the following is not an advantage of the direct method?

A) The benefit is simplicity.

B) The direct method is easy to use.

C) No need to predict the usage of support department services by other departments.

D) It ignores information about reciprocal services provided among support departments.

E) None of these are disadvantages.

6) Under the ________ ________ once a support department's costs have been allocated, no subsequent support-department costs are allocated back to it.

A) direct method

B) support method

C) divisional method

D) reciprocal method

E) step-down method

7) An alternative way to implement the reciprocal method is to formulate and solve linear equations.

8) When there are more than two support departments with reciprocal relationships, manager can use software such as Excel to calculate the complete reciprocated costs of each support department.

9) Managers implement the step-down method because it allocates support-department costs to other support and operating departments.

10) The reciprocal method is known to be the most precise method because it considers the mutual services provided among all support departments.

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