Costing - Study Mode
[#81] Method, which allocates cost of support department for operating departments by recognizing all mutual services provided is classified as
Correct Answer
(D) reciprocal method
Explanation
Solution: Method, which allocates cost of support department for operating departments by recognizing all mutual services provided is classified as reciprocal method. In the reciprocal method, the relationship between the service departments is recognized. This means service department costs are allocated to and from the other service departments.
[#82] Package which consists of two or more products to be sold for single price, but components of products in package have separate stand-alone price is called
Correct Answer
(C) bundled product
Explanation
Solution: Package which consists of two or more products to be sold for single price, but components of products in package have separate stand-alone price is called bundled product. A bundled product is a package of two or more stand-alone products sold together for a single cost.
[#83] Method, which allocates cost of support department to operating and support departments is known as
Correct Answer
(C) step down method
Explanation
Solution: Method, which allocates cost of support department to operating and support departments is known as step down method. The step method (also known as step down method) allocates the cost of a service department to other service departments as well as to operating departments. The cost allocation under step method is a sequential process.
[#84] Approaches to allocate costs of support department do not include
Correct Answer
(D) both b and c
Explanation
Solution: Approaches to allocate costs of support department do not include dual-rate cost-allocation method and single rate cost allocation method.
[#85] In incremental cost allocation method, cost object user who is ranked second in ranking order is known as
Correct Answer
(A) First incremental user
Explanation
Solution: In incremental cost allocation method, cost object user who is ranked second in ranking order is known as First incremental user.