1.

How should differences between actual and budgeted costs be treated?

Select one answer.

Check All That Apply

• A. Allocated (charged) to other departments. Allocated (charged) to other departments.

• B. Examined for causes and then charged against the period's income.

2. Rave Reviews Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly). The number of employees in each department follows.

Cafeteria	40
Human Resources	60
Machining	200
Assembly	300

Rave Reviews uses the direct method of cost allocation and allocates cost on the basis of employees. If Human Resources cost amounts to $1,800,000, how much of the department's cost would be allocated to Machining?

Multiple Choice

• $600,000.

• $720,000.

• $900,000.

• $1,200,000.

• None of the answers is correct.

3. Rave Reviews Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly). The number of employees in each department follows.

Cafeteria	40
Human Resources	60
Machining	200
Assembly	300

Rave Reviews uses the direct method of cost allocation and allocates cost on the basis of employees. If Human Resources cost amounts to $1,800,000, how much of the department's cost would be allocated to Assembly?

Multiple Choice

• $900,000.

• $720,000.

• $1,080,000.

• $1,200,000.

• None of the answers is correct.