Question 1

The human resources department is an example of a shared service department.

Accepted Answer

A shared service department provides services to multiple departments within an organization to avoid duplication of efforts and to streamline operations, and the human resources department typically serves this role by managing employee-related functions across the entire organization.

Question 2

The accounting department is NOT a shared service department.

Accepted Answer

The accounting department can be considered a shared service department as it provides essential financial services and support to various departments within an organization, rather than offering services or products directly to external customers.

Question 3

Shared service departments are departments that work together to convert raw materials into finished goods.

Accepted Answer

Shared service departments provide support services to other departments within an organization, rather than converting raw materials into finished goods.

Question 4

A service department is a centralized, non-revenue generating department that provides services to many other departments at a customer's company.

Accepted Answer

A service department is a centralized, non-revenue generating department that provides services to other departments within the same company, not at a customer's company.

Question 5

A service department is a decentralized, revenue generating department that provides services to many other departments within the company.

Accepted Answer

A service department typically provides support services within a company and does not directly generate revenue.

Question 6

Bob-Co allocates all copying charges to the departments that use their services. This means Bob-Co's copying department is a shared service department.

Accepted Answer

A shared service department is one that provides services to other departments within the organization, and allocating copying charges to the departments using those services is characteristic of a shared service department's function.

Question 7

Which of the following is NOT likely to be a shared service department?

Accepted Answer

Advertising for a single department is not typically considered a shared service because shared services are departments that provide support and services to multiple departments within an organization. Advertising for a single department is focused on the needs of that specific department rather than serving multiple departments.

Question 8

Burrito Blast manufactures two types of burritos-bean and beef. Which of the following is NOT likely to be a shared service department for Burrito Blast?

Accepted Answer

Work in progress-bean is specific to the production of bean burritos and not a shared service department that supports multiple departments or product lines like the physical plant, human resources, or copying departments would.

Question 9

Burrito Blast manufactures two types of burritos-bean and beef. Which of the following is MOST likely to be a shared service department for Burrito Blast?

Accepted Answer

A copying department is a shared service that can be used by multiple departments within a company, unlike advertising or work in progress which are specific to particular products.

Question 10

Burrito Blast manufactures two types of burritos-bean and beef. They share payroll and human resource department services with other departments. What is the typical allocation base for the payroll and human resource department costs?

Accepted Answer

The number of employees is a common allocation base for payroll and human resource department costs because these costs often relate directly to the number of individuals employed, making it a fair and straightforward method for allocating such shared expenses.

Question 11

Burrito Blast manufactures two types of burritos-bean and beef. They share accounting department services with other departments. What is the typical allocation base for the accounting department costs?

Accepted Answer

The typical allocation base for accounting department costs is the number of reports prepared, as this reflects the amount of work or services provided by the accounting department to different departments or products.

Question 12

Burrito Blast manufactures two types of burritos-bean and beef. They share mail department services with other departments. What is the typical allocation base for the mail department costs?

Accepted Answer

The typical allocation base for mail department costs is the number of pieces of mail processed, as it directly relates to the volume of work and resources used by the mail department.

Question 13

Burrito Blast manufactures two types of burritos-bean and beef. They share legal department services with other departments. What is the typical allocation base for the legal department costs?

Accepted Answer

The typical allocation base for legal department costs is the number of hours spent on legal issues, as it directly correlates to the amount of legal services used by each department.

Question 14

City Inspections has three departments using the services of the Legal Department. Total monthly shared legal department cost is $20,000. The Annual inspections department has 5 employees that used 100 hours of legal services. The Emergency services department has 8 employees that used 200 hours of legal services. The Roads Division has 7 employees that used 300 hours of legal services. Which is the best method to allocate shared legal costs?

Accepted Answer

The best method to allocate shared legal costs among the departments is based on the number of hours of legal services used by each department. This approach directly ties the cost to the actual consumption of legal services, making it the most equitable and reflective of each department's use of the legal department's resources.

Question 15

City Inspections has three departments using the services of the Payroll Department. Total monthly payroll shared cost is $20,000. The Annual inspections department has 5 employees that make 20 requests. The Emergency services department has 8 employees that make 50 requests. The Roads Division has 7 employees that make 30 requests. Which is the best method to allocate shared payroll costs?

Accepted Answer

The best methods to allocate shared payroll costs in this scenario are either by the number of employees or the number of employee requests. Both methods directly relate to the services provided by the Payroll Department to each department, making them fair measures for cost allocation. Operating income does not directly relate to payroll service usage.

Question 16

Shoppers paradise, a wholesaler, ships various products worldwide. Some shipments are made to an individual customer and some are made on bulk orders that are mailed to multiple addresses. The company is considering how to best allocate the cost of shipping. Total monthly shared cost for the 	department is $20,000. The following data are available:
 Which is the best method to allocate shared shipping costs?

Accepted Answer

The answer of Shoppers paradise, a wholesaler, ships various products...

Question 17

Bright College is a community college located in Bright, CA. It provides instruction in five areas: Art, Business, Computer Science, Graphic Design, and Nursing. The college shares copy services with a total monthly cost of $10,000. The college is considering allocating costs using either number of copies or operating income as its allocation base. Data for the month of September, 2012 follows: 
 Which is the best method to allocate shared copy costs?

Accepted Answer

The answer of Bright College is a community college located...

Question 18

Stretchmore, Inc. has two product divisions-Rubber Bands and Bungee Cords. The Rubber Band Division products budgets an average sales price of $4 and budgets variable costs of $2 per unit. The Bungee Cord Division budgets an average sales price of $50 and budgets variable costs of $12 per unit. Both divisions use the Accounting Department, which incurs monthly shared cost of $10,000. Data for the month of July follows:
 Which is the best method to allocate shared accounting costs?

Accepted Answer

The answer of Stretchmore, Inc. has two product divisions-Rubber Bands...

Question 19

Trips to Remember, Inc. provides vacation trips to various locations around the world. The company's
Headquarters are located in Meadows Place, TX. The headquarters provide two main services to the four tourist locales: accounting and customer services (reservations).
Budget and actual data for each of the four tourist locations are as follows:
 The Accounting Services Department actually incurred $11,000 in accounting costs for May 2012. The Reservation Department incurred $23,000 in actual costs, of which $20,000 were traceable to the locations. Which is the best method to allocate traceable accounting costs?

Accepted Answer

The answer of Trips to Remember, Inc. provides vacation trips...

Question 20

Cool Surfboards has two departments that both use a conference room (shared facilities). Total monthly conference room cost is $1,000. The Wave Blaster department has 15 employees that reserved 60 hours of conference room time. The Boogie Break department has 5 employees that reserved 100 hours of conference room time. Wave Blaster would receive less allocated shared facilities cost if the number of employees were used as the allocation method.

Accepted Answer

The answer of Cool Surfboards has two departments that both...

Quiz 9: Allocating Service Department Costs and Responsibility Accounting