Multiple choice

1) Gomez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year _____. Maintenance Personnel Mixing Finishing Direct dept. costs $126,000 $84,000 $105,000 $175,000 Square footage 800 400 1,600 1,200 Number of employees 8 12 24 32 If the step-down method is used to allocate costs and the Maintenance Department is allocated first, the amount of overhead that would be allocated from Maintenance to Mixing is: 

A. $36,000 

B. $42,750 

C. $42,000 

D. $63,000 

2) _____ is (are) used for external reporting. 

A. Absorption costing and variable costing 

B. Direct costing 

C. Variable costing 

D. Absorption costing

 3) _____ is another term for variable costing. 

A. Absorption costing 

B. Traditional costing 

C. Direct costing 

D. Full costing 

4) In absorption costing, costs are separated into the major categories of_____. 

A. variable and non manufacturing 

B. fixed and variable 

C. manufacturing and fixed 

D. manufacturing and non manufacturing