1. Calculate the total amount of overhead allocated if there was $125,000 of overhead costs and 25,000 direct labor hours.
A: $5
2. Companies use rates to allocate manufacturing overhead to products.
A: Overhead
3. method assumes that all service departments benefit equally from each other.
A: Direct
4. Purchased materials is considered an indirect cost of producing a product.
A: False
5. The dual rate method allocates overhead based on a combination of direct labor costs and direct machine hours.
A: False
6. are indirect costs that cannot be easily traced to a particular cost object.
A: Common costs
7. Overhead costs should be allocated based on the usage of overhead resources.
A: True
8. A costing system that assigns overhead first to direct costs, then to products is called
A: Two Stage
9. Which cost allocation method leads to higher service department costs for departments that appear later in the sequence?
A: step-down method
10. Which of the following is not a step in allocating service department costs?
A: Allocate service department costs as a percentage of operating department costs